Cyprus is in a difficult position regarding the new fees Chevron is demanding, Charalambos (Charles) Ellinas, told KYPE, while emphasizing that “if we back down, our profits from ‘Aphrodite’ will be low.”
At the same time, regarding the Crete–Cyprus power interconnection (GSI), Mr. Ellinas expressed his belief that “the chances of the project moving forward are good.”
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Mr. Ellinas said that Chevron and its partners are asking for $3 per million British thermal units (MMBTU), approximately 1,000 cubic feet, for the use of a portion of the pipeline running from Cyprus to Egypt, and this has a massive impact on Cyprus’s profits from the field.
“It reduces Cyprus’s revenue by $3 and puts Cyprus in a very difficult position,” he added.
Furthermore, he noted that if negotiations with Israel over the shared Aphrodite–Isaac field “do not result in a positive outcome, we will incur costs there as well and find ourselves in a difficult position”.
According to Mr. Ellinas, something similar happened with “Kronos,” when “the Italian company Eni demanded that we take greater risks, and we accepted them,” resulting in the field being developed, but Cyprus’s profits “will be meager.”
When asked how Cyprus could respond to the Chevron issue, Mr. Ellinas said that “Cyprus’s position is difficult, because the pressure is on Cyprus,” and added that Cyprus ranks lower on Chevron’s list of priorities due to other massive projects the American company has in other parts of the world.
He explained that Chevron is under no pressure to move forward with production from “Aphrodite” since it has decided to make a major investment in the Israeli “Leviathan,” which is increasing production and doubling exports to Egypt.
“That project is more profitable than ‘Aphrodite,’” as the cost per unit is about 60% of the cost of ‘Aphrodite,’ he noted, adding that as for “Aphrodite,” Chevron “can sit back and wait until we back down.”
He noted that the American company has “other massive projects in other parts of the world, such as in Guyana and Venezuela, where it has huge investments.”
Mr. Ellinas said that we need to weigh the costs against the benefits and questioned whether we should wait for the results of the exploration being conducted by the other American company, ExxonMobil, in other blocks.
He noted that ExxonMobil is continuing its exploration in the Cypriot and Egyptian blocks, with the aim, should the exploration efforts succeed and its reserves double, of building an LNG export terminal, to which the “Aphrodite” could also be routed.
“It’s not worth selling it off just to say we did it, but without reaping any benefits,” he added.
Crete–Cyprus Power Interconnection
When asked to comment on developments regarding the Crete–Cyprus electricity interconnection (GSI), Mr. Ellinas expressed his conviction that the intervention by the U.S. Secretary of State and the remarks made by the U.S. Ambassador to Cyprus—that “he sees light at the end of the tunnel—the first time something like this has been said—means that behind the scenes, the U.S., France, and Greece are trying to find a solution with Turkey.”
“Although Turkey is taking a hard line, it has not reached a dead end,” he added.
When asked to assess the chances of the project moving forward, Mr. Ellinas expressed his conviction that “the chances of the project moving forward are good,” and added that Greece must issue the NAVTEX by the end of October.
“Once the NAVTEX is issued and Turkey does not intervene, the chances of anything bad happening afterward will be low,” he noted.
Mr. Ellinas referred to the benefits Cyprus will derive from the project and added that Finance Minister Makis Keravnos’s opposition to the project is not based on studies. He added that a thorough study will be provided by the European Investment Bank (EIB).
He stated that Turkey’s demands are unreasonable and unfounded, adding that the EU also rejects these demands and that only Turkey itself and the government in Tripoli, Libya, support them.
“Turkey and Libya have forgotten that there are islands in the Aegean and that there are Crete and Cyprus, and they have drawn a line that divides the Mediterranean in two,” he added.
Energy Crisis
Noting that energy prices are at high levels and when asked if he sees an energy crisis coming in Europe, Mr. Ellinas said that a crisis would occur if the winter is harsh and if there is a lull in the wind, resulting in insufficient wind energy.
“It’s a difficult situation in Europe; reserves are quite low, and it’s hard to replenish them right now because there’s competition between Europe and Asia for the world’s lowest-priced LNG exports,” he noted, adding that “about 20% of LNG exports from Qatar and the United Arab Emirates no longer reach their destination.”
This means, he continued, that Europe and Asia are competing for smaller volumes, which is why prices are high.
Mr. Ellinas said that the situation will become more difficult next year, when Europe will need to replenish its storage facilities—which will have been depleted by this winter—and prices will remain high.
“Prices will remain high, and the cost of energy in Europe will be high,” he added.
He also noted that “there is no easy solution” and added that “Europe made the wrong decisions on the issue of climate change with the goals it set and promoted, and today it is paying the price.”
Mr. Ellinas said that the cost of electricity in China is 8 cents per kilowatt-hour, in the United States 18 cents per kilowatt-hour, and in Europe, 28 cents per kilowatt-hour, and he wondered how Europe can compete with such high energy costs.
This figure is due to the climate decisions Europe has made, even though Europe’s emissions account for only 6.5% of global emissions, he concluded.
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Source: CNA
