The leadership of the Cyprus Natural Gas Public Company (DEFA), comprising the Chairman and Vice Chairman, refrained from making any commitments during a comprehensive meeting held at the Ministry of Energy, led by Giorgos Papanastasiou, sources told Phileleftheros.
The discussions failed to produce a definitive timeline for the delivery of the liquefied natural gas (LNG) re-gasification terminal, the completion of the gas transport infrastructure to power stations, or when electricity producers will be ready to use natural gas.
DEFA’s reluctance to commit stems from unresolved issues due to past delays and mismanagement, which make accurate forecasting challenging. Consequently, it remains uncertain when or to what extent there may be a risk of insufficient electricity supply.
The prospects for using natural gas for electricity generation in 2024 seem bleak, with even 2025 being questionable. Despite the government’s silence on the matter, expert predictions point towards the unlikelihood of natural gas being utilised within these timeframes.
A representative from the Electricity Authority of Cyprus (EAC) revealed during the meeting that trial runs for using natural gas at their Vasilikos units are scheduled for the autumn of 2025.
Given the requirement of approximately two months for each unit to undergo the trial phase, it appears improbable that natural gas-powered electricity will be feasible in 2025, leading to another two years of reliance on expensive, polluting fuels, estimated to cost around €300 million annually. This translates to electricity prices being approximately 25% higher than EAC’s actual costs.
Another critical issue discussed was the potential for negotiations with the Chinese company CPP, which is managing the consortium constructing the LNG terminal in Vasilikos. The situation remains uncertain, especially after CPP and its subcontractors halted all operations last week, citing a one-month payment delay from the Natural Gas Infrastructure Company (ETYFA). Although ETYFA acknowledged and resolved the delay by initiating a payment to CPP, it remains to be seen whether this will lead to the resumption of work.
Even if construction in Vasilikos resumes, doubts persist regarding CPP’s ability to meet the July 2024 deadline. While CPP remains optimistic, ETYFA’s Project Team and other officials deem this timeline unrealistic. ETYFA has requested a new schedule from the Chinese contractors, with a response still pending.
Relations between the two parties remain strained, despite some improvement following the appointment of new government officials and the new chairpersons of DEFA and ETYFA. There’s potential for a confrontation, particularly concerning the certification and delivery of the Floating Storage and Regasification Unit (FSRU) by CPP to the Republic of Cyprus.
Furthermore, even if the issues with the quay and land infrastructure in Vasilikos are resolved, challenges persist with the gas transmission pipeline system to EAC and the private companies PEC and Paramount.
The tendering process for the pipeline construction is still underway, and with the bid under review by the Administrative Court, it’s unclear when gas will be supplied to the production units.
This uncertainty raises concerns about electricity supply sufficiency in the summer of 2025, especially if some EAC and PEC units need to undergo trials for natural gas usage. Possible solutions include bolstering EAC’s Dhekelia station with two 40 MW units, due to the Transmission System Operator’s capacity limitations, or leasing mobile production units.
While the former is deemed less costly and polluting, it’s uncertain whether the installation can be completed by summer 2025.
Without natural gas, neither PEC’s units (260 MW) nor EAC’s sixth unit under construction (160 MW) will be operational within 2025.
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