Filenews 20 March 2022 - by Chrysanthos Manolis
As the indecisiveness observed in the timely promotion of the construction works of the natural gas regasification terminal in Vassilikos calls into question the observance of the new timetable for the delivery of the project (July 2023), the information of "Phileleftheros" reports that the Greek company Energean, listed on the Tel Aviv and London stock exchanges, has informed the President of the Republic in writing that it is reinstating its proposal for the transfer of natural gas to Vassilikos, through a pipeline from the deposits it manages in Israel's EEZ.
The proposal foresees the construction of a pipeline connecting the privately owned FPSO from the gas abstraction and processing area from the Energean deposits, off Israel, with Vassilikos, so that the fuel can be supplied directly to the EAC or to private producers of conventional electricity, without further processing.
The "F" information says the reinstatement of the proposal to the government foresees starting the delivery of natural gas in early 2024. Given that the Chinese consortium that undertook to build the FSRU (floating regasification plant) in Vassilikos has committed, according to the Ministry of Energy, to deliver the project in July 2023 (instead of October 2022, which was the previous schedule), the question arises as to what the use value of Energean's natural gas, which could be in Cyprus at the earliest in early 2024, arises. The information tells us that Energean invokes in her letter to the President of the Republic an argument that she had also used in 2018-19, when she had again submitted a similar proposal, without it being seriously discussed by the government. Energean argues that the pipeline from Israel could work alongside the Chinese FSRU at Vassilikos to ensure competition between them and to upgrade the country's security of gas supply.
It should be noted that Energean's proposal does not entail any capital costs for the state. The costs of building the pipeline from Israel's EEZ to Vassilikos will be covered by the company. Also, the cost of manufacturing the FPSO (Floating Production Storage Offloading) has already been undertaken by Energean, for the purpose of producing and transporting natural gas, as of autumn 2022, to its customers in Israel, with whom it is already committed by contracts. Therefore, if the government wants to discuss Energean's proposal, even with a four-year delay, it will simply negotiate the price of natural gas per unit delivered to the EAC station. If the price is not considered satisfactory, compared of course with the price per unit of the gas that will be regasified by the Prometheus FSRU, then simply the proposal of the Greek company will be rejected.
The regasification terminal will cost around €300 million, not counting the cost of operation and maintenance. Some 100 million have been secured as a grant from the EU, €43 million has been granted by the EAC against 30% of the shares of the state-owned Natural Gas Infrastructure Company and the rest from loans from the EIB and the European Bank for Reconstruction and Development. The cost of construction and maintenance will be transferred to the cost of natural gas that will be secured by DEFA through bilateral long-term contracts and through the daily market (spot market).
Finally, we would like to point out that the revision of the contract with the consortium under the Chinese state-owned company China Petroleum Pipeline Engineering Co., Ltd. (CPP) is pending, in order to modify the timetables and increase, by at least €25 million, the compensation to the companies. The amendment of the contract must be approved by the Central Committee on Changes and Claims (KEAA).
