This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 4/26/2019

Overview

The Republic of Cyprus, 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, and auxiliary services.  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 Republic of Cyprus’ 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 plant in the Republic of Cyprus, assuming sufficient deposits of natural gas are discovered.
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 by implementing the much-anticipated New Market Rules (NMR) by July 1, 2019.

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.  DEFA plans to launch two different tenders: one for the development of an LNG facility in Cyprus and accompanying infrastructure (ideally for a Floating Storage and Regasification Unit - FSRU), and one for the procurement of natural gas.  The first tender is expected before the end of the third quarter of the year, followed by the natural gas supply tender late in the third quarter of 2018.  Both tenders will have a short turnaround window for bid submissions.  DEFA welcomes U.S. business participation in these tenders.

Infrastructure Development: 
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 125 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 Republic of Cyprus, 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 Republic of Cyprus will require new bunkering infrastructure for LNG fuel.  This has been taken into account in port upgrade efforts.

Pipeline Construction: 
The Republic of Cyprus and Egypt have discussed exporting Cypriot natural gas to Egypt, but a deal has not been finalized.  Industry experts anticipate a tender will be issued for the construction and maintenance of two pipelines:  one to deliver gas to existing LNG facilities in Egypt 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) are reviewing the technical details to transport natural gas via pipeline from Cyprus’ Block 12 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 by 2017.  Oil companies are still in the process of relocating but should be able to complete their move by the end of 2019.  Companies that offer site remediation may find opportunities for new business as a result of this requirement.

Education – Energy Related Degrees from Cypriot Universities in Collaboration with U.S. Universities:
With the discovery of offshore hydrocarbons in the Republic of Cyprus’ 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.

Web Resources

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

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