Michael Karagiannis, ACCA

There is "no reason" for the gas market monopoly given to state-owned Cygas to continue given sufficient private-sector interest in investing, CEO of Cyfield Group George Chrysochos told me. Read full interview free in the comments! Cyprus gave Cygas the monopoly thinking that it was the only feasible way to cover the large cost of developing the Vasilikos LNG import terminal, but the government has since been "extremely slow and inefficient in completing the terminal", Chrysochos said. And since 2019, private investors — notably regional producer Energean — have shown increasing interest in Cyprus' gas market, "indicating that there is no reason for the monopoly to exist", he said, adding that a competitive liberalised market would reduce the price of gas imports and therefore also domestic electricity production. The Vasilikos project is currently under investigation by national and European authorities on suspicion of procurement fraud, misappropriation of EU funds and corruption. The project's shared liability between disparate companies made it "impossible for many parties to show interest", Chrysochos said. Completing the project is a priority for Cyprus and that can be done in one of two ways, he said. Either state-owned developer ETYFA could issue a new construction tender using EU and Cypriot funds, which could potentially be completed within a year, or ETYFA could "give the terminal as a concession" to a new operator that finances all remaining work, operates the facility and pays annual rights to Cygas, Chrysochos said. The "ideal scenario" for bringing gas to Cyprus would be to build a pipeline directly to existing Israeli offshore fields, and if funding for a pipeline to Israel's Karish field were available, that would "definitely bring cheaper gas to Cyprus", he said. "All redundancies are welcome," he added. But with Vasilikos already 80pc complete and its floating storage and regasification unit (FSRU) purchased, completing the terminal is the "most reasonable option", Chrysochos said. Cyprus has made several large gas discoveries in its exclusive economic zone, but has been unable to develop them commercially. "Cyprus is a small market and cannot serve as a starting point that will make this extraction feasible," Chrysochos said, meaning that "the viability of the project depends 100pc on the sale of these quantities abroad." Because of this, the only "feasible way" for Cyprus to utilise its discoveries is to pipe the gas to Egypt, where it can be liquefied and then exported back to Cyprus or elsewhere, he said. Alternatively, a pipe could be built to bring gas directly to Cyprus from the Aphrodite field. The consortium developing Aphrodite submitted plans to pipe processed gas to Egypt in September, with similar plans for production at Cronos. #gas #LNG #Cyprus #power #CCGT #trading #Med #Karish #Energean #Israel #Greece

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