LAST WEEK’S decision to award an offshore gas exploration licence to a consortium which includes a subsidiary of Gazprombank may have been a sweetener for a hoped-for Russian loan to keep the government afloat until the end of its term, reports said yesterday.
Daily Alithia, a newspaper supportive of the DISY party, said the Cabinet’s decision to award the Block 9 licence to a consortium including GPB Global Resources BV (a Gazprombank subsidiary) was clearly a political decision designed to sugar-coat a request made by Cyprus for a €1 billion loan from Russia.
But according to the paper, the loan would not come from the Russian government per se, but rather from Russian banks involved in the Block 9 project.
Citing senior government sources, Alithia said the Christofias administration hopes the €1 billion will be enough to ride out the storm until February’s general elections.
The sources said the government wants at all costs to avoid signing a bailout deal with the EU/IMF, which would come attached with austerity measures.
In fact, Alithia said, this €1 billion is precisely the “new” or “revised” Cypriot request for a Russian loan to which AKEL leader Andros Kyprianou alluded to last Thursday.
Kyprianou had said President Christofias – realising that Russia was having difficulty responding to Nicosia’s initial demand for a €5 billion loan – has submitted a new proposal, which was “now on the table.”
Kyprianou made the revelation shortly after returning from Moscow. But on the same day, the finance minister denied knowledge of any “new” request by Nicosia.
Alithia speculated that the reason why the finance minister was in the dark about this “new” request is because it does not concern an interstate loan, but a different arrangement altogether.
Data seen by the Mail show that to date Block 9 has been by far most the popular offshore prospect in the second licensing round, with a total of eight bids submitted for it.
The prospect lies northeast of Block 12, where US firm Noble Energy reported significant reserves of natural gas after exploratory drilling last year.
By a Cabinet decision, acting on a recommendation by the Commerce Minister, the licence for Block 9 was awarded to a consortium consisting of Total E&P Activities Petrolieres (operator), NOVATEC Overseas Exploration & Production GMbH and GPB Global Resources BV.
But according to Alithia, this consortium’s bid was ranked fourth by the evaluation committee - consisting of government technocrats and experts.
It’s understood that the evaluation committee’s highest rating for Block 9 went to the bid submitted by another consortium, that comprising Italy’s ENI and South Korea’s KOGAS.
Alithia said certain members of the evaluation committee are “outraged” at the Cabinet’s selection. One member was quoted as saying that the winning bid was financially not the most beneficial to Cyprus. He went on to claim that he had been put under “enormous pressure” to change his mind and pick the Total-NOVATEC consortium against his better judgment.
Government sources yesterday neither denied nor confirmed the existence of a divergence of opinion between the evaluation committee and the final recommendation of the Commerce Minister. Everything was done by the book, they told the Mail.
To their knowledge, no company or consortium has indicated an intention to challenge the award decision.
The same sources explained that in assessing the bids for Block 9 the evaluation committee employed just two of the five criteria listed in the call for expressions of interest. These criteria were: the technical and financial ability of the applicants, and “the ways in which the applicant intends to carry out the activities that are specified in the licence.”
But the Commerce Minister employed a different set of criteria (all five) in arriving at his own recommendation.
The other three criteria are: national security; the financial consideration that the applicant is offering in order to obtain the license; and “any lack of efficiency and responsibility that the applicant has shown under any previous licence or authorisation of any form in any country of the world.”
When presenting his proposal to the Cabinet, the minister brought with him two sets of documents: his own recommendation and that of the evaluation committee.
Under the relevant law, the Cabinet reserves the right to override the recommendation of a panel if it deems that other factors are germane, such as issues of national security.
Also bidding for Block 9 was a consortium consisting of Edison International SpA (Italy), Delek Drilling Ltd Partnership (Israel), Avner Oil Exploration Ltd Partnership (Israel), Enel Trade SpA (Italy), and Woodside Energy Holdings Pty Ltd (Australia).
Alithia suggested also the timing of the award of the licences was strange. It said the four offshore licences were awarded just days after another Cabinet session gave the green light to Noble to farm out 30 per cent of its stake in Block 12 to Israel’s Delek group.
The paper said the move was made to “appease” the Israelis for not awarding them the licence for Block 9.