This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/29/2019

Overview

The Republic of Cyprus (ROC), located at the cross-roads of Europe, Africa, and the Middle East, offers opportunities for U.S. energy and energy-sector service providers in the areas of consulting, environmental assessment, offshore hydrocarbon exploration and exploitation, supply of natural gas for domestic use, and basing of auxiliary energy services for the wider region.  Although currently the island is powered almost exclusively by heavy fuel oil and limited renewable energy sources, the government is making efforts to import natural gas by 2020 to avoid significant EU-enforced carbon emission penalties.  Exploration and exploitation of natural gas deposits in the ROC’s Exclusive Economic Zone (EEZ) continue, and efforts to monetize confirmed and other recently discovered natural gas deposits in the ROC’s EEZ are ongoing.  Some options considered for monetization include a pipeline to Egypt’s existing Liquefied Natural Gas (LNG) facilities and the construction of an onshore LNG export plant in the ROC, assuming licensed operators discover sufficient deposits of natural gas.

In 2014, the Republic of Cyprus ended the state-owned Electricity Authority of Cyprus’ (EAC) monopoly on electricity generation and distribution.  Stimulating competition remains difficult, however, given the small size of the market.  The Cyprus Energy Regulatory Authority (CERA), in cooperation with the Transmission System Operator (TSO) and other energy stakeholders, is working to alleviate competition constraints in the power generation sector.  Although in part New Market Rules (NMR) are already implemented, full implementation is not expected until 2021.   

The U.S. Embassy Political/Economic team can assist any company interested in pursuing energy opportunities in the Republic of Cyprus.  To acquire our Cyprus Energy Profile report or for more information on the energy landscape, please contact Commercial Specialist Ms. Ephie-Yvonnie Charalambidou.   
 

Leading Sub-Sectors and Opportunities

Tenders for the Procurement of Natural Gas and Related Facilities:  

The Republic of Cyprus’ Natural Gas Public Company (DEFA), which is appointed as the sole importer of natural gas in Cyprus, intends to procure natural gas for power generation in an effort to meet looming EU 2020 targets.  The company  released a pre-qualification expressions of interest tender on June 4, 2019 for the procurement of natural gas for domestic use; Bid submissions are due September 6, 2019.  This is the second part of the tendering process to provide the local market with natural gas.  DEFA issued the first tender in October 2018 for the development of an LNG import facility in Cyprus and accompanying infrastructure (ideally for a Floating Storage and Regasification Unit - FSRU).  This tender is still in progress and the contract award is still pending.  DEFA welcomes U.S. business participation for the supply tender. 

Infrastructure Development / Port Facilities: 
To encourage the development of infrastructure for the import of LNG to Cyprus, the European Commission will partially fund the CyprusGas2EU project from the trans-European infrastructure program Connecting Europe Facility (CEF).  The funding, which amounts to EUR 101.5 million (USD 114 million) will not include construction of port facilities (separate project – see below) or the FSRU lease.  Also partially funded by CEF, the Poseidon Med II project covers the ROC, Greece, and Italy.  Used as a practical roadmap, it aims to promote the adoption of LNG as a safe, environmentally efficient, and viable alternative fuel for shipping.  To implement, the ROC will require new bunkering infrastructure for LNG fuel.  This has been taken into account in port upgrade efforts.  The Cyprus Ports Authority (CPA) plans to upgrade and extend the existing port in Limassol and construct a new port in Vasilikos (near the port city of Limassol) to facilitate energy companies.  The Vasilikos project will involve setting up a berthing area for the FSRU and/or for an LNG carrier.  The ROC estimates the cost of construction at EUR 128 million (approximately $143 million) with an expected completion date of end of 2021. 

Pipeline Construction: 
The ROC and Egypt are discussing potential natural gas exports from the ROC’s EEZ.  Industry experts anticipate a tender for the construction and maintenance of two pipelines -- one to deliver gas to existing LNG facilities in Egypt, and most likely Idku, and the other to bring gas onshore to serve the domestic Cypriot market.  The Cyprus Hydrocarbons Company (CHC) and the Egyptian Natural Gas Holding Company (EGAS) have reviewed  the technical details to transport natural gas via pipeline from the ROC’s Block 12, “Aphrodite” field to Egypt.

Site Remediation: 
As part of its efforts to become a tourism hub, the Larnaca municipality issued a decree in January 2014 requiring oil companies operating there to relocate their fuel storage facilities {oil products and Liquid Petroleum Gas (LPG)}, a move which should be complete by 2020.  Companies that offer site remediation may find opportunities for new business as a result of this requirement.

Supply and Construction of a Combined Cycle Gas Turbine (CCGT) Unit for the EAC:
The EAC recently issued a tender for consultancy services to prepare the specifications, design audit and approval, and project management of the construction and installation of a CCGT unit for its Vasilikos Power Station (VPS).  There are currently 5 units installed at VPS, two of which are CCGT.  The new tender will be for Unit 6 with a nominal output between 130 and 160 MW. 

Education – Energy Related Degrees from Cypriot Universities in Collaboration with U.S. Universities:
With the discovery of offshore hydrocarbons in the ROC’s EEZ and the potential for additional discoveries in the future, many local universities are designing curricula and degree programs in hydrocarbons, petroleum engineering, and related sectors.  Cypriot universities are interested in establishing linkages with U.S. universities specialized in these and related fields.  This is also a priority area for the Cyprus Hydrocarbons Company (CHC).
 

Web Resources

Natural Gas Public Company (DEFA)
Cyprus Energy Regulatory Authority (CERA)
Ministry of Energy, Commerce, and Industry – Hydrocarbon Services Department
Cyprus Hydrocarbons Company (CHC)

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