2020 Cyprus Country Report
The 2020 Cyprus Country Report features in-depth articles on the economy, foreign direct investment, international trade and headquartering as well as detailed sector profiles and insights from Cyprus’ 100 most influential political, economic and business leaders shaping the future of their country and its industries.
The 2020 Cyprus Country Report features in-depth articles on the economy, foreign direct investment, international trade and headquartering as well as detailed sector profiles and insights from Cyprus’ 100 most influential political, economic and business leaders shaping the future of their country and its industries.
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Energy: Oil & Gas<br />
Sector Profile<br />
ments. VTTV’s strategic location makes it the first<br />
terminal of its kind in the Eastern Mediterranean<br />
offering these services and connecting Europe and<br />
the Black Sea with markets in the Middle East and<br />
Asia. The industry has tremendous growth prospects<br />
with <strong>Cyprus</strong>’ determination to establish itself<br />
as a key energy hub and a stronghold of stability<br />
in the region.<br />
LNG IMPORT TERMINAL<br />
Until it is able to develop its own gas, <strong>Cyprus</strong> is<br />
planning to import LNG to replace heavy fuel oil<br />
and diesel in power generation. Not only is this<br />
expected to bring the cost of electricity down,<br />
but it will also lead to a substantial reduction<br />
in carbon dioxide emissions, helping <strong>Cyprus</strong><br />
achieve its Paris Agreement pledges.<br />
In December 2019, <strong>Cyprus</strong> signed a landmark<br />
deal with a Chinese-led consortium to build a<br />
€290 million LNG import terminal at Vassilikos.<br />
The project has secured a €101 million grant from<br />
the EU under the Connecting Europe Facility<br />
(CEF), with the EAC contributing €43 million<br />
securing a 30% stake.<br />
The terminal will include a floating storage and<br />
regasification unit (FSRU), a jetty for mooring<br />
the FSRU and related infrastructure. The attractiveness<br />
of <strong>Cyprus</strong> to gas companies is confirmed<br />
by another offer to import LNG. This is under<br />
consideration by the <strong>Cyprus</strong> Energy Regulatory<br />
Authority (CERA). Construction of the terminal<br />
started in July <strong>2020</strong>, with completion expected by<br />
2022. It is <strong>Cyprus</strong>’ largest project.<br />
CONNECTING POWER GRIDS<br />
Another important regional energy project is<br />
the EuroAsia Interconnector, which will link the<br />
power grids of <strong>Cyprus</strong> with Greece and Israel via<br />
an undersea cable. The 2,000-Megawatt (MW)<br />
Interconnector, is the only North-South electricity<br />
interconnection in the Central Eastern<br />
and South Eastern Europe Priority Corridor.<br />
Licenced Blocks<br />
Block Licensors Year<br />
2 ENI, Kogas 2013<br />
3 ENI, Kogas 2013<br />
6 ENI, Total 2017<br />
7* ENI, Total 2019*<br />
8 ENI 2017<br />
9 ENI, Kogas 2013<br />
10 ExxonMobil, Qatar Petroleum 2017<br />
11 Total, ENI 2013<br />
12 Noble Energy, Delek Drilling,<br />
BG <strong>Cyprus</strong> Limited 2008<br />
* Formal licence approval still pending<br />
The permitting procedure started in 2019 and<br />
is expected to be completed by December <strong>2020</strong><br />
for the construction of the first power ‘corridor’<br />
with a capacity of 1,000 MW costing €3.5 billion.<br />
The Crete-Attica link is expected to commence<br />
in September 2022, and the <strong>Cyprus</strong>-Crete and<br />
<strong>Cyprus</strong>-Israel links in December 2023.<br />
The Interconnector will end the energy isolation<br />
of <strong>Cyprus</strong> and contribute to achieving the<br />
EU Energy Union’s goals of connecting European<br />
energy networks, achieving the electricity interconnection<br />
target for 2030 of at least 15%. It will<br />
also contribute to the internal energy market integration,<br />
increase security of energy supply, and<br />
support sustainable development by integrating<br />
renewable energy sources across the EU.<br />
The project is progressing to plan, with the<br />
selection in March <strong>2020</strong> of Siemens AG as the<br />
preferred bidder for the award of the contract for<br />
the construction of the ‘VSC Converter Stations’<br />
of the EuroAsia Interconnector.<br />
An important milestone was achieved in<br />
July <strong>2020</strong>, when the government of <strong>Cyprus</strong><br />
issued the Interconnector with the final building<br />
permit to construct a high voltage direct current<br />
(HVDC) converter station in <strong>Cyprus</strong>, with a capacity<br />
of 2,000 MW. Construction is planned to<br />
start before the end of <strong>2020</strong>.<br />
This has since been followed by a framework<br />
agreement to also set up an EuroAfrica<br />
Interconnector to link the power grids of Egypt,<br />
<strong>Cyprus</strong> and Greece through subsea HVDC cables<br />
with the capacity to transmit 2,000 MW. The<br />
Interconnector is a VSC-HVDC scheme which<br />
will allow the bidirectional transfer of 1,000 MW<br />
(Stage 1) between the converter stations, with an<br />
estimated cost of €2.5 billion. Completion of the<br />
project is planned for December 2023.<br />
KEY ENERGY HUB<br />
<strong>Cyprus</strong> is well positioned to further strengthen its<br />
role as a stable and attractive location in which<br />
to base energy infrastructure projects and headquarters<br />
for international companies servicing<br />
the region. The country’s EU status and beneficial<br />
business operating environment provides the<br />
island with unique advantages to establish itself<br />
as a strategic player and facilitator in the EMEA<br />
energy market. With increased regional cooperation<br />
and the unfolding discoveries in the Eastern<br />
Mediterranean, the growing potential of the developing<br />
oil and gas sector offer expanding opportunities<br />
for investors, and has established<br />
<strong>Cyprus</strong> as a stable and secure location for companies<br />
to manage their operations from. n<br />
Discover more at www.cyprusprofile.com<br />
This year we<br />
have the start<br />
of the <strong>Cyprus</strong><br />
LNG Import<br />
Project. A<br />
significant<br />
transformational project<br />
for <strong>Cyprus</strong> that will have a<br />
broader impact on the Eastern<br />
Mediterranean region. Through<br />
the project, we will achieve<br />
the opening of the power<br />
generation from conventional<br />
sources with the activation<br />
of IPPs. Competition coupled<br />
with a cleaner and lower cost<br />
fuel will drive a reduction<br />
of electricity costs for all.<br />
Symeon Kassianides<br />
Chairman<br />
Natural Gas Public<br />
Company (DEFA)<br />
New<br />
discoveries<br />
and the<br />
plans for<br />
more drilling<br />
bode well,<br />
prospects for more<br />
discoveries are excellent<br />
and hopefully increasing<br />
gas reserves will bolster<br />
export viability, especially<br />
through a liquefaction<br />
plant at Vassilikos but<br />
also to regional markets.<br />
The longer-term future of<br />
hydrocarbon development<br />
in <strong>Cyprus</strong> looks good,<br />
despite regional geopolitical<br />
challenges. With unit costs<br />
continuing to drop, including<br />
those of storage batteries,<br />
the potential to expand<br />
development of renewables is<br />
strong and can bring <strong>Cyprus</strong>’<br />
high electricity costs and<br />
carbon emissions down.<br />
Charles Ellinas<br />
CEO<br />
E-C Natural Hydrocarbons<br />
Company Ltd (e-CNHC)<br />
82 <strong>Country</strong> <strong>Report</strong> CYPRUS <strong>2020</strong>