Cypriot gas hopes all hot air?
NICOSIA - Cypriot hopes that by 2020 the island will be earning desperately needed revenue from gas exports to pay off its mountainous debt met with scepticism from industry analysts gathered in Nicosia this week.
With the island reeling from the devastating terms of a eurozone bailout that crippled its once lucrative financial sector and ushered in years of austerity and a sharp recession, the promise of windfall revenues from offshore gas fields has been seized on by an anxious public.
But analysts say that the timetable being set by state oil and gas firm KRETYK for building the necessary infrastructure is wildly optimistic.
They say the volume of the gas find that is actually commercially exploitable remains to be proven and that Cyprus's plans are heavily dependent on the decisions of neighbouring countries about how they exploit their own reserves.
KRETYK chairman Charles Ellinas voices no doubts about his timetable.
"It is all progressing very well," Ellinas said on the sidelines of the Nicosia conference on natural gas in the eastern Mediterranean.
"We plan to be in a position in 2015 to reach the final investment decision. That will mean that we can start construction in early 2016. We should be able to bring first gas to Cyprus end of 2018 to early 2019," he said.
"End of 2019 to beginning of 2020, we expect to begin exports."
But analysts say the tight schedule being set by Cyprus to build a liquefied natural gas plant on its south coast so that it can export its reserves by tanker takes no account of its lack of industry experience.
"It takes much longer than that to build an LNG plant, even if you are an experienced country in the LNG field," said Fiona Mullen, an analyst with the economic consultancy firm Sapienta.
"There is no way you can build an LNG plant in two or three years, it is not possible. What the government is doing, is trying to keep people's hopes up."
The KRETYK chief is confident that the $12 billion in investment that will be required to build a three-train LNG plant can be found without the need for debt-ridden Cyprus to come up with any cash.
He estimates that the reserves off the island could total as much as 850 billion cubic metres, which he says would easily justify the investment.
"It is only conjecture," he acknowledges. "But we are very hopeful."
For now the only firm figure comes from US major Noble Energy, which made the first find off Cyprus's southeast coast in 2011.
It gave a December estimate of the "resources" in that deposit of between five and eight trillion cubic feet
But the company has not yet tallied up the corresponding "reserves" - the amount of gas that can actually be technically and economically extracted - and says it will only do so from June when a rig becomes available from operations off Israel.
Cyprus's current lack of proven reserves of its own has made Israel's plans hugely important for the island's timetable.
"If Cyprus is going to do it by itself, without Israel, it will have to wait until it is confirmed that is has got more reserves, so it puts the start date to build an LNG plant further back," said Mullen.
Cyprus oil and gas specialist Pierre Godec agrees.
"For the time being gas is more of hope than a salvation," he said. "Cyprus gas is not going to be developed without taking into account what happens in Israel and eventually Lebanon."
The importance of Israel's plans is not lost on the Cyprus government, particularly after a rapprochement between Israel and Turkey brokered by US President Barack Obama last month sparked renewed talk of the possibility of Israeli export pipeline to the Turkish coast.
Two Cypriot ministers have been in Israel this week and President Nicos Anastasiades is to visit next month.
But the KRETYK boss insists he remains confident.
"I don't think Israel will be keen to put itself to become dependent on Turkey for the next 25-30 years," Ellinas said.