The government is “examining the possibility” of declassifying Cyprus’ energy market from its current status as “emergent”, Energy Minister George Papanastasiou said on Wednesday.
Cyprus’ energy market is currently classified as “emergent” in line with European Union regulations, which allows the country to derogate from a number of articles of relevant EU law.
The country’s energy market’s status allows for the application of different rules regarding the authorisation procedure for the construction and operation of natural gas facilities, regarding how the relevant rules are written, and regarding third-party access to liquefied natural gas (LNG) facilities and the wider transmission and distribution system.
The government believes that declassifying Cyprus’ energy market, and thus adhering to the EU laws from which it can currently derogate, will encourage more potential energy suppliers to take an interest in the country’s energy market, especially in light of the ongoing strife with regards to the LNG terminal at Vasiliko.
With the government set to put out a tender for the selection of a new project manager for the terminal’s continued construction following the withdrawal of Chinese-led construction firm CPP-Metron Consortium Ltd (CMC) in July, it is believed that now may be the time to change the legal status of Cyprus’ energy market.
“Our motivation is the difficulties we face in many matters. We have weaknesses in the supply chain and knowledge in others, we have an endless [LNG] terminal right now and we need to make bold decisions … in the context of the situation in which we find ourselves,” he said.
“The only way to free [the market] and not stay in this current lockdown is to think of alternatives, and this is an alternative that the energy ministry thought of.”
One noticeable change which may be predicated by the declassification of Cyprus’ energy market will be that the public natural gas company Defa will no longer be the sole natural gas supplier in the Republic.
The changed status would automatically open Cyprus’ market to private entities to import natural gas and utilise the natural gas infrastructure company (Etyfa)’s onshore infrastructure to supply the market.
It is believed that this will allow Cyprus to circumvent the ongoing impasse over the legal dispute between Etyfa and CMC over the floating storage regasification unit (FSRU) Prometheus, which is currently located in Shanghai.
CMC insisted that Etyfa had “refused” to take delivery of the FSRU.
However, Cyprus Energy Regulatory Authority (Cera) chairman Andreas Poullikkas urged caution and restraint.
He said Wednesday’s meeting was “the first time I have heard about the abolition” of Cyprus’ energy market’s status, and that Cera had just four days previously received a letter from the energy ministry “asking us to investigate the possibility”.
Such an investigation, he said, would see Cera examine “which regulatory decisions are needed to be able to regulate a market which will have several natural gas suppliers”.
“We are in the process of looking into it,” he said.
