Cyprus study says switch to LNG does not necessarily mean savings

Jul 06, 2007 02:00 AM

by Elias Hazou

The Cyprus government’s claim that a Liquefied Natural Gas (LNG) floating unit is the cheapest solution may not at all be true and is debatable at best. A study said the much-vaunted switch to the less expensive fuel does not necessarily translate into savings.
It all depends on how existing infrastructure is used, it said.

The government claims that abandoning diesel for LNG will mean saving hundreds of millions of pounds for taxpayers, and that the fastest way to do that would be building an offshore unit. By contrast, a land-based facility would be ready no earlier than 2014, the government says.
But employees at the state-run electricity utility, which so far has had a virtual monopoly over the import and processing of fuel on the island, are up in arms over the government plans. They say the government commissioned, then ignored, three studies carried out by foreign experts, all concluding against the creation of a floating unit for the Cypriot market.

Alithia said that following a meeting last March between Commerce Minister Antonis Michaelides -- the man spearheading the floating unit concept -- and industry professionals, the Electricity Authority of Cyprus (EAC) was willing to go along with the offshore solution but only if the cost of processing LNG was proved to be beneficial. The clear implication was that the Cabinet would conduct a study comparing the cost of processing LNG to that of conventional fuel.
But according to Sotos Savva, a senior trade unionist affiliated to the EAC, the subsequent decision by the Cabinet made no mention whatsoever of these comparative costs -- strongly suggesting that the government had already made up its mind on the floating unit.

Savva explained that lower costs would arise from using a fourth power plant at the Vasilikos facility, because the new plant is far more efficient than existing ones. In other words, money would be saved simply via the use of more efficient technology, whether or not the fuel was diesel or LNG.
Alithia further pointed out that nowhere else in the world does a floating unit exist. Neighbouring Italy, for instance, has been trying for five years -- unsuccessfully to secure an environmental study for such a facility.

Natural gas is the cleanest burning fossil fuel, but still is a major emitter of greenhouse gases. And in California, Governor Arnold Schwarzenegger is said to be having second thoughts about shipping the fuel from afar to meet the state's energy needs.
In Cyprus, the LNG chronicle has taken all sorts of twists and turns, particularly in the wake of revelations that it was the President’s law firm which registered a joint venture that is poised to bid for the £ 1.5 bn (EUR 2.24 bn) project. News reports said the real owner of the Cypriot partner in the venture has been identified as a 41-year-old businessman active in the shipping industry and who has had dealings with SBM, the foreign partner, in the past.

Source: Cyprus Mail
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