Cyprus Starts Negotiations for LNG terminal

Cyprus started negotiations with three energy firms to develop a liquefied natural gas (LNG) terminal, hoping to start exports by 2020, wrote Reuters on Wednesday. 

"Completion of this project is an important step towards the realisation of our energy strategy, with the ultimate objective the establishment of Cyprus as a regional energy hub," Energy Minister Yiorgos Lakkotrypis said at a ceremony on Wednesday where a project memorandum of understanding was signed.

The European Investment Bank, the EU finance organization, said it would consider investing in the liquefied natural gas (LNG) terminal.

Discovery of natural gas fields off the Mediterranean island could help to ease a grim economic outlook after authorities had to close one bank and seize savings in a second in return for €10 billion in aid from the European Union and International Monetary Fund in March.

Technip, a French company specialized in the building and operating of natural gas and oil terminals, conducted a study on behalf of Noble Energy for the construction and operation of the LNG terminal in Cyprus. The results of the study, shared with Cyprus National Hydrocarbons Company (CNHC), confirmed Noble’s wish to accelerate the process of building the LNG terminal before a possible drop in the price of LNG.

Also Israeli company Delek Drilling and Avner Oil Exploration are interested in the project and will discuss the technical and commercial details of any eventual deal on LNG terminal. Delek and subsidiary Avner Oil exploration hold a 30 percent stake in a gas field off Cyprus’ southern coast that is estimated to contain 5-8 trillion cubic feet of gas. Texas-based Noble Energy holds the other 70 percent.

Reuters report that the sides hope to conclude talks by Dec. 31, explaining that the terminal's cost is estimated to $6 billion.