On 13 December 2019 Cyprus and a multinational consortium signed a contract to build a EUR290mln LNG terminal in Cyprus for the import of liquified natural gas for electricity generation.
The Cyprus natural gas infrastructure company (ETIFA, subsidiary of Natural Gas Public Company) signed the contract with the consortium consisting of METRON S.A. (Greece), Hudong-Zhonghua Shipbuilding Co Ltd (China) and Wilhelmsen Ship Management Ltd (Norway). The consortium is led by China Petroleum Pipeline Engineering Co Ltd.
It is estimated that this energy project will be completed by 2022 and will have an operational expenditure (Opex) at EUR10.5mln per year. It will include a floating storage and regasification unit (FSRU), a jetty for mooring the FSRU, a jetty-borne gas pipeline and ancillary infrastructure. It is also envisaged to develop a gas pipeline from Israel’s Exclusive Economic Zone to Cyprus.
Cyprus secured a EUR101mln grant from the European Union pursuant to the Connecting Europe Facility (CEF), the Cyprus Electricity Authority will further contribute EUR43mln and ETIFA will fund the remaining part with secured financing from the European Investment Bank (EIB) and the European Bank for Reconstruction and Development.
The operation of the LNG terminal in Cyprus will enhance energy security and efficiency in the region through diversification of energy production and competitive practices, as well as significantly reduce Cyprus’ carbon footprint.
Following years of efforts and commitment, this project undoubtedly propels Cyprus in the natural gas era. Needless to say the project must adhere to the highest standards and strictest qualitative, quantitative and financial criteria, along with the requisite precautionary environmental measures being put in place to safeguard the natural habitat.
Importantly, there has also been remarkable progress in the development of renewable energy projects, including photovoltaics and wind farms. Electricity from renewable sources is widely encouraged in Cyprus through a number of local and EU policies that support development, installation and use of RES installations.
Cyprus therefore has significant potential to play a key role as an energy hub in the Mediterranean, however must simultaneously aim to meet expectations for Climate Change targets and Sustainable Development goals.