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A pipeline for peace?

17 February 2013

In the wake of presidential elections, where polls show Nicos Anastasiades to be the front runner and following stories in Turkish and Israeli newspapers, some think that relations between the Republic of Cyprus and Turkey may be set to improve.

Anastasiades, voted for the Annan Plan in 2004 and has a more positive attitude towards Turkey. If he becomes president, he will be inheriting a greatly impoverished Cyprus, its natives disgruntled by the outgoing the anti-Turkish President Christofias.

EU creditors would like to see the transport of gas finds off south Cyprus run via undersea pipes to southern Turkey as it is the most cheap and viable option. So economic neccessity may force a more pragmatic relationship between the RoC and Turkey.

On the other hand in an interview with a Reuter’s journalist, The RoC state hydrocarbons company chairman Charalambos Ellinas of KRETYK said this January that:

“We are in advanced discussions with Noble on jointly developing the LNG [liquid natural gas] terminal.”

Based on the present timeframe, construction should start by early 2016. It will take an estimated four years to complete the LNG export terminal and three years, meanwhile, to build offshore installations and sub-sea pipelines.

Ellinas said the terminal, which will be located in the Vasilikos area on the island’s southern coast, could cost around 6 billion euros and have a production capacity of 5 million to 6 million tonnes of LNG per year.

“We should be in a position to deliver gas (domestically) by the end of 2018 and start selling LNG (abroad) in 2019,” he said.

South Cyprus has held talks with neighbouring Israel, which has also reported major gas finds in the past decade, on channelling Levantine gas to the Cypriot terminal.

“The basin could probably not sustain more than one LNG hub,” Ellinas said.

However, given that the RoC is in a parlous state, financially, and that construction of the LNG terminal is not yet underway, there may be the possibility that the south will concede to the idea of piping gas under the sea to south Turkey. Interestingly, even Greek Cypriot Archbiship Chrysostomos said he thought it was a good plan and would benefit everyone in Cyprus – even the Turkish Cypriots.

Currently circulating newspaper stories indicate that Israel and mainland Turkey may already be discussing the transport of gas via Turkey to Europe. Although officially denied by government representatives on both sides, the story wont die down.  Israeli drilling companies who have expressed an interest in using the proposed LNG terminal in south Cyprus, will inevitably be thinking that piping the gas is a cheaper alternative than shipping liquid gas to Europe.

Perhaps, in the end, pragmatism will prevail. Turkey will gain revenue from the pipeline, if it does get constructed, the RoC and Israel will be able to transport gas at less cost to themselves and the environment.

Doubtless too, these possibilities will be an influencing factor on the Cyprus peace talks and the outcome of the peace talks will influence whether or not the gas is transported by pipeline .

The world will be watching.

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