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China eyes Cyprus' multi-billion dollar LNG developments

China has officially joined the growing band of countries seeking to play a role in putting flesh on Cyprus’ multi-billion-dollar plans to develop the island’s natural gas reserves.

A Chinese delegation made this clear during a visit to Cyprus leading the island’s Energy minister, George Lakkotrypis to declare: “There is very strong interest from China… in energy, in the whole value chain, upstream, downstream and midstream.”

Lakkotrypis, talking to the media last week, said the Chinese were interested in the development of an LNG export terminal, including potentially a floating LNG facility (FLNG). Indeed, the delegation includes reps from China State Shipbuilding Corp. A Chinese stake in Cypriot gas fields is also said to be on the table.

The Mediterranean island nation is hoping gas can buoy the struggling economy, which was rescued by an international bailout 12 months ago. Cyprus has been planning an LNG export plant at  Vasilikos, near Limassol, since US-based Noble Energy discovered the Aphrodite field.

The estimated $10bn needed to build the LNG export terminal and infrastructure would be the largest investment Cypriot history. But recently drilling results revealed smaller reserves than initially hoped and mean reserve estimates were reduced from 169bn cumtrs to 140bn cumtrs, not enough to justify building the LNG project unless more gas is found.

Cyprus hopes to attract large investors to take a stake in its gas fields, an option the Chinese delegation in Cyprus is to discuss for China is seeking to access new gas sources around the world as its energy demand rises and the government encourages industry to move to cleaner gas from coal.

Italy’s ENI is also interested in Cyprus’ gas fields, and is set to sign a memorandum of understanding (MOU) with the government over the construction of an LNG export terminal. ENI has already signed an exploration and production-sharing contract with the government to search in three offshore areas, with exploration expected to begin in the second half of this year.

 

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