Filenews 26 June 2022 - by By Panikos Charalambous*
One of the issues that the President of the Republic informed the members of the National Council last Monday about was Turkey's possible provocations in the Cyprus EEZ. According to what was leaked, the Government does not exclude Turkish moves in block 6, without, however, taking action against foreign companies operating in the Cypriot EEZ. To this end, according to the same sources, the government pointed out that "the Turks did not harass ExxonMobil" and this "is not considered accidental".
And indeed, it may not be a coincidence that Ankara did not act (for the time being) against ExxonMobil, but I would like together to ask ourselves whether we are accidentally handling this big issue called "Natural Gas" (or unfortunately we have entrusted this huge issue to the political leaders). And the questions today are even more numerous, due to the surge in fuel and electricity prices.
If I were to make an introduction to get everyone into the topic, I would first note the following:
Firstly, the issue-natural gas has two aspects: a) its import and exploitation by EAC for electricity production purposes and, b) the discovery of natural gas deposits in the Exclusive Economic Zone (EEZ) and therefore its exploitation in the Cypriot market.
Secondly, the issue -natural gas can be divided into three periods: a) the period concerning the first data and information on the possible existence of deposits in the Cypriot EEZ, b) the "effort" - and you will then understand why the quotes - of using natural gas by EAC to produce cheaper electricity and with very low pollutants and, c) the interconnection of electricity production with natural gas discovered in the Cypriot EEZ.
Thirdly and importantly, that more than 40 years have passed, but we have not seen natural gas, nor the production of electricity with its use.
Fourthly, and perhaps most importantly and at the same time tragically, we are less than 30 years away where it is planned not to use any conventional fuels in the countries of the European Union except with energy produced from Renewable Energy Sources (RES). That is, the years that have passed since the vocabulary of our state and our own natural gas entered the vocabulary of our state, are now more than what remains for it to be used - by Cyprus at home.
In 1980 the first information
The first impact on natural gas deposits in the Cypriot EEZ was made on August 4, 1980 by the Senior Director of Standard Oil of Indiana, M.J. Ambrose to the then Minister of Foreign Affairs of the Spyros Kyprianou government, Nikos Rolandis. According to written testimonies of the late Nikos Rolandis, Standard Oil, in collaboration with Amoco, had expressed interest in investing millions of dollars in research in the sea area south of Cyprus, where the "Aphrodite" section is located. However, as Mr. Rolandis adds, "But Turkey, which was obviously well informed, had threatened with a further military operation in Cyprus." The matter was also raised before the then Secretary-General of the United Nations, Kurt Waldheim, who, according to the former minister, conveyed to our side the same information about Turkey's threats and so the whole effort was abandoned.
Natural gas and electricity
I will not go into the history of natural gas deposits any further, as I want to move on to the next issue, which relates to its exploitation as a fuel for energy production. Because, for more than 20 years, we have been hearing about natural gas and we have not seen gas. As a result, we pay for electricity in Cyprus much more expensively and in recent years we also pay high fines for pollutants.
We were supposed to have F.A. in 2007!
The first decisions and timetables for the utilization of natural gas as a fuel for the production of electricity were taken in the early 2000s and it was then that the first timetables were entered in the most formal way.
For example, in an official announcement of the Clerides Government, dated 8/10/2001, under the title "Minister of Commerce: The issue of the supply of natural gas to Cyprus is in the process of being realized", the following statements of the then Minister Nikos Rolandis were mentioned verbatim: "The issue of the supply of natural gas to Cyprus began to enter into a state of realization. During today's meeting we examined the ways and procedures to be followed in order to put into practice the ambitious plan of natural gas power generation (...). I must mention that the main customer in the first stage will be the Electricity Authority, which is already preparing for the operation of its fourth unit with natural gas. We are placing this operation around the year 2006. Of course, the Government's goal is the wider use of natural gas, both for industrial and domestic use".
That meeting under the Minister of Commerce was attended by the leadership of the EAC and the Planning Bureau.
"Final decisions"!
Fourteen months later (December 2002) the 'final decisions' were supposedly taken. Following a new meeting under the Minister of Commerce, in a relevant announcement entitled "One of the largest projects ever carried out in Cyprus is being implemented", Mr. Rolandis stated, among other things, that "this was the last meeting" and "that the decision on the method of transporting natural gas to Cyprus was taken". The decision provided for the creation of an energy centre in Vasilikos and the creation of a terminal for the receipt, de-liquefaction and storage of natural gas and the receipt and storage of petroleum products.
The cost of the whole project was then estimated at between 200 million and 250 million dollars and, according to the minister, the project would be implemented with private funding. Mr. Rolandis stressed in his statements again that the planning was for the project to be ready in 2007. He also noted that in view of Cyprus' accession to the EU, "the use of natural gas, which is environmentally friendly, becomes necessary" and also that together with "renewable energy sources will become in the near future the main sources of energy in Europe". He also said that natural gas "is typically cheaper than fuel oil".
Therefore, the then Clerides Government, a few months before the expiration of its term of office, had reached decisions on natural gas, had planned to be imported and used in Cyprus since 2007 and understood the obligation of Cyprus to move from the use of fuel oil to the use of natural gas and alternative energy sources. That's 20 years ago...
From 2007 to 2010!
In 2003 Glafkos Clerides lost the elections and the targets for the use of natural gas by EAC since 2007 were never implemented. The Tassos Papadopoulos Government saw things in a different way and oriented its actions for a two-speed solution: temporary, with the utilization of a floating de-water de-registration unit for the use of natural gas by the EAC and further study of how to definitive solutions for natural gas, such as the construction of an onshore terminal.
Goals change, and dates change. In June 2007 (the year in which EAC was supposed to start producing electricity with natural gas), the then Minister of Commerce Antonis Michaelides stated, among other things, the following: "If there were chances to have the onshore terminal in a reasonable time from today, i.e. close to 2009-10, that EAC's power plants would be able to use natural gas, then there would be no discussion (...). The problem arises from the fact that this land terminal cannot be built close to this period, while based on the ministry's calculations, which are realistic, the onshore terminal can be built around 2014-15". Therefore, Mr. Michaelides added, the Ministry of Commerce "is exploring alternative ways of bringing natural gas to Cyprus around 2010".
Therefore, at the very least, EAC would start using natural gas by 2010 at the latest!
From 2010 to 2015!
In 2008, however, Tassos Papadopoulos lost the elections. The Christofias Government came and the studies on natural gas began again. Natural gas from the Cypriot EEZ has now been put on the map and thus things have become even more complicated, for a country that tends to postpone big decisions, without taking into account the costs borne by its citizens.
Thus, we are hopefully reaching August 2012, that is, a few months before the end of the term of office of the Christofias government, with the then Minister of Commerce Neoklis Sylikiotis telling us that "it is not a simple matter" to transport natural gas to Cyprus. However, according to Mr. Sylikiotis, the Council of Ministers did not stand idly by: "In its last session it has decided to assign DEFA and EAC to proceed with preparation for expressions of interest for the earliest possible finding of natural gas quantities, without specifying the technology, for electricity purposes, as a parallel process." But again... nothing.
Necessary note on procedures
I have refrained from mentioning information and rumours of scandals and serving interests behind the whole gas issue. My goal is to demonstrate the timeless procrastination in decision-making on such an important issue for the economy, the place and the citizen himself, for every household and every business in Cyprus, small and large.
From 2013 to 2023 and... Seeing!
In February 2013, the AKEL government ends. DISY wins the elections and Nicos Anastasiades is elected President of the Republic. The plans of the previous Government are being overturned and new ones are coming in, with new timetables.
In September 2013, i.e. a few months after President Anastasiades took power, a meeting was held under him on "the interim solution for natural gas, with the aim of reducing the price of electricity". Because, as the then Minister of Commerce George Lakkotrypis emphasizes after the meeting, "the discussion took place in the context of the president's effort and desire, from the first day of assuming the Presidency of the Republic, to reduce the price of electricity, something that will also make the economy more competitive and will give breathing space to households".
Therefore, the Anastasiades Government has been setting itself the goal of producing energy from natural gas as soon as possible from the first months of its rule, in order to give us "breaths". However, it is far from the target dates that are being achieved. Among other things, Mr. Lakkotrypis, who served as Minister of Commerce and Energy for almost eight years, placed the import of natural gas into Cyprus for electricity generation initially in 2016. Later, in 2018 and then in 2020, the year his ministerial term ended.
Mr. Lakkotrypis was replaced by the current Minister Natasa Pilides, who recently stated the deadline for the import and utilization of natural gas in Cyprus on July 31 2023. Many energy players also consider this forecast to be very optimistic.
We have been paying for electricity at least 20% more expensively for decades
I am not an expert, but according to information I collected from authoritative sources on the internet, the cost of electricity could have been cheaper by about 20% (minimum) if all the previous years for the production of electricity we used natural gas. According to the relevant sources, the use of natural gas for the production of electricity would result in an increase in production with the same volume of fuel by 12% to 20%, as the efficiency of the relevant combined cycle units would increase to 52-55%, compared to 35-40% of conventional power plants.
Characteristic are the statements made last September by the former president of the Cyprus Energy Regulatory Authority, George Siammas. As he pointed out, all the efforts made in the last 20 years to produce electricity using natural gas, fell on deaf ears. According to Mr. Siammas' calculations, if Cyprus used natural gas for electricity generation, the cost would be at least €150 million lower on an annual basis, by today's standards. The €100 million would relate to the reduction of fuel costs and €50 million. reducing emissions. According to what the Natural Gas Public Company (DEFA) writes on its website, the use of natural gas in electricity generation leads to significantly fewer pollutants such as "about 30% reduction in carbon dioxide emissions and almost zero emission of acidic gaseous pollutants".
As I wrote last Sunday in my analysis entitled "Cyprus: A country energy-trapped", only in the last two years EAC has paid €147.6 million for pollutants. (€74.7 million in 2020 and €72.9 in 2021) and has budgeted €183.3 million. for 2022.
But things do not end here, EAC has invested €450m for many years. in mixed cycle production units, so that it was ready to use natural gas as a fuel from 2008! The delay in the arrival of natural gas, obliges for many years the EAC to operate these units with diesel, fuel as a rule even more expensive than fuel oil!
* Journalist
