Cyprus is interested in buying natural gas from Israel until the development of its own Block 12 gas reserve is completed. The subject arose at a meeting between Israel's Minister of Energy and Water Resources Dr. Uzi Landau and his Cypriot opposite number in Jerusalem this week. Energy market experts however cast doubt on the economic worthwhileness of the idea, because of the high cost of laying the infrastructure for transporting gas to the island.
The proposal arose against a backdrop of fears in Cyprus that completion of the development of the Aphrodite reserve in Block 12 is several years distant, and meanwhile the island will not have gas available for generating electricity. One estimate is that it will take six years to complete development of the reserve and construct the infrastructure for transporting the gas to the island.
At present, electricity is produced in Cyprus using costly and polluting diesel fuel, and the Cypriot government seeks to expedite conversion of power plants to natural gas, among other things because of fiscal constraints. The potential gas consumption of the Cypriot market is estimated at 1.5 BCM a year, a quantity that represents about 20% of Israel's current gas consumption. Cypriot Minister of Commerce, Industry and Tourism Neoklis Sylikiotis suggested to Landau at their meeting this week that he should consider the idea of Cyprus buying Israeli gas as part of the upgrading of cooperation between the two countries. An initiative for laying a power supply cable between Israel and Cyprus is already undergoing advanced feasibility studies by Israel Electric Corporation.
Dr. Amit Mor, CEO of consultancy Eco Energy Ltd., told "Globes" that it was doubtful whether it was economically worthwhile to construct infrastructure for transportation of gas to Cyprus just for local consumption on the island. He said that such a project would be worthwhile if gas could also be supplied to liquefaction facilities, which would make it possible to export the gas to markets in Europe and Asia.
Published by Globes [online], Israel business news - www.globes-online.com - on June 13, 2012
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