THE WORLD is in constant flux. Adaptability is key to survival.
For years, Cyprus fed off the golden goose of tourism until its coasts resembled harsh outlines of a concrete tapestry, hospitality became a byword for a long-gone era, and cheap budget airlines took the tourists away.
The break-up of the Soviet Union sent shockwaves throughout the world, releasing endless wads of cash to Cyprus’ shores. The island’s surplus of lawyers and accountants helped develop its financial services to a level that challenged tourism’s dominance.
And then the economic crisis came. Europe stuttered, Greece happened and our much-respected banking system committed hara-kiri.
So, what next?
In a word, energy.
Last December, US company Noble Energy announced a sizeable offshore gas find in Cyprus' Exclusive Economic Zone (EEZ), stimulating an overnight flurry of excitement with everyone wanting to know when Cyprus will benefit from the discovery.
One foreign energy expert complained that he suddenly started receiving daily lunch invites from prominent figures, all wanting to know how they could get in on the act.
At some point, in one fantastic wave of osmosis, the vast majority of the population, from politicians to journalists and coffee-drinkers, became experts on gas exploration, extraction and commercialisation.
The results of the second round of licencing for Cyprus’ remaining blocks in its EEZ gave more reason for hope as reputable medium-to-large-sized companies registered interest in the country’s ultra-deep deposits.
All this in stark contrast to the mood in 2007, when Cyprus launched its first licensing round and only one medium to small-sized international player, Noble, showed interest, winning the offshore concession for Block 12.
In recent months, the bursting enthusiasm has settled somewhat, with a more realistic understanding that heavy issues require weighty decisions and time.
What will Cyprus do with its gas? How soon can it get it onshore? What are the interim options for importing gas to help curb soaring electricity prices? What is the potential for energy partnerships with neighbouring countries?
These questions remain unanswered. However, the prospect of developing an energy industry in Cyprus, combined with the parallel gas potential in neighbouring Israel has made energy the buzzword in the corridors of Nicosia’s business hotels.
Cyprus has a small market and its energy needs are not sufficient to warrant the level of investment needed for deep water extraction. The only way for Noble to consider Block 12 viable is if it gets to export the gas. The Houston-based company has pretty much dismissed pipeline options to Greece or Turkey, preferring instead to follow the path of liquefied natural gas (LNG).
This, in turn, requires a costly liquefaction terminal, to the tune of €10 billion, to prepare the gas for export. Can the estimated seven trillion cubic feet of gas in Noble’s Aphrodite field justify such a huge investment? Noble and the government’s Energy Service director Solon Kassinis seem to think so. The latter is more than confident that Cyprus’ remaining blocks have substantial reserves to offer, with a twinkle in his eye on the mention of Block 9.
Last Thursday, Commerce Minister Neoclis Sylikiotis revealed that the government has taken the decision to build a liquefaction plant for natural gas on the island, sending a clear message that Cyprus is getting into the export market, with or without new gas fields or Israeli collaboration. Talks with Noble on the finer details of the terminal should make headway in the coming months.
Israel, which has made significant gas discoveries in recent years, has yet to officially decide whether it will even export its natural asset. An interim report commissioned by the Israeli government suggests it will but advises against sending gas abroad for liquefaction. There is talk of an LNG terminal being built in Eilat on the Red Sea, to be used for export to Asia while bypassing the Suez Canal.
Speaking to the Sunday Mail, Kassinis said things should be much clearer when Sylikiotis returns from his trip to Israel where he is due to meet with Energy Minister Uzi Landau tomorrow.
Last year, Kassinis proposed five collaborative projects to Israel: building a 2000MW power plant in Cyprus to enhance the security of supply for Israel; joint pipelines to Cyprus from Israeli and Cypriot offshore fields; joint use of an LNG terminal in Cyprus; and the construction of methanol and petrochemical plants on the island.
“No political decisions have been taken yet. I hope that when the minister goes, it will clear up the scene,” he said, betraying a tinge of impatience.
The energy director seems to think that Israel’s fixation on national security prevents it from appreciating the opportunities for peaceful energy collaboration in the wider region.
Regardless of what Israel does, Cyprus wants to forge ahead with its new burgeoning industry.
Kassinis already has an idea on where at least some of the gas should go when it is finally extracted: “We are a member of the European family and need to contribute to the security of supply of Europe. It’s a must.”
He takes pride in noting that Cyprus has a larger energy administration than Israel: “They came to us and we showed them what we’re doing in the data room downstairs, how we evaluate the data, the environmental aspects in the region and so on.”
He further notes that Cyprus was the first country in the region to make a strategic environmental impact assessment in 2008, before the Gulf of Mexico oil spill and relevant EU directive.
When the first drilling started in Block 12, Kassinis had a contingency response plan in case of spillage that went up to Tel Aviv. He questions whether Egypt, Libya or Israel ever had a drilling response plan for an oil spill reaching Limassol.
“We’re taking the lead in that respect to disseminate this knowledge and create this infrastructure, and exchange views and ideas.”
At an energy conference last week, Kassinis’ personal role and contribution to the birth of the Cyprus energy industry was widely acknowledged by a number of speakers. One moderator called him “Mr Energy”, another described him as a “significant and influential figure”, while a third said he was a “real visionary and believer”.
It’s not hard to see why. When Noble’s representative gave a rather sedate response to the prospects of finding oil, Kassinis butted in to stress in no uncertain terms: “The geophysical data indicates there is oil and we shall find it.”
He told the Sunday Mail: “My dream was to find hydrocarbons in the sea. Nobody believed me. Now I’m quite happy because they honour me in many places in the world. I feel happy that one dream became a reality but the real dream will be when we have gas contributing to Cyprus’ economy onshore.”
A towering figure with oodles of confidence, the question comes to mind: what is your biggest fear?
“My fear is that a lot of people who are not involved in the oil and gas business might create delays and mismanagement. The proper management of this resource and blessing is very crucial for today and future generations.”
Which people?
“The people that might be involved... politicians, parties. A lot of people are talking. A lot of people became experts...”
Asked how he’s getting on with his new boss Sylikiotis – the third commerce minister appointed during this administration- Kassinis replies their relations are “very good”, much better than with the last one.
Energy chief Solon Kassinis