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19th Sep 2018

EU to pump €101m into Cyprus gas network

  • Nicosia. Most of Cyprus' energy is powered by oil and petroleum products (Photo: Kyriakos)

The European Union is going to pump €101m into a project aimed at hooking Cyprus up to natural gas, as part of the so-called Southern Gas Corridor, it announced on Thursday (25 January).

According to the European Commission, member states agreed on Thursday to invest €873m overall in energy infrastructure, including around €200m in natural gas projects.

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The CyprusGas2EU project "will end the current energy isolation" of Cyprus, a member of the bloc since 2004.

Cyprus relies on oil and petroleum products for almost its entire energy consumption - in 2012 it was around 95 percent.

Seven years ago however, significant gas resources were found in the eastern Mediterranean Sea.

The EU contribution would amount to 40 percent of the total costs, and would include the construction of an offshore liquid natural gas facility.

"The action's maturity is excellent and the implementation can start promptly," the commission said about the Cyprus project in an internal document, seen by EUobserver.

It said that while the project proposal did not "demonstrate specific effects in regards of technological innovation", it would deliver "particularly high benefits at national level in terms of sustainability of electricity generation".

Initially the project promoters had requested that the EU finance 75 percent, but according to the internal document they did not justify the need for that "exceptional" co-funding rate.

Last November, the commission already said in a report that the gas field discoveries raised the profile of the eastern Mediterranean region as a gas producer and exporter.

"It is therefore in the EU's interest to assist the countries in the region [Israel, Cyprus, Egypt] in better exploiting their energy resources and to develop mutually-beneficial commercial cooperation," it said.

Fossil fuel

However, the more than €100m investment in natural gas, a fossil fuel, is likely to irk environmentalist groups.

Although gas emits less CO2 per energy unit than coal or oil, it is still a fossil fuel which contributes to potentially disastrous climate change.

The commission's press release was titled 'More growth and jobs: EU invests €873 million in clean energy infrastructure', which is stretching the definition of clean energy.

The decision also raises the question why not more money is invested in renewable energy.

In a 2014 country report of Cyprus, the European Commission itself said that the country had "remarkable potential in solar and wind".

Trans-Caspian Pipeline

Another gas project approved on Thursday, was a contribution of almost €1.9m to a €3.7m project related to the Southern Gas Corridor, which would ship gas from the Caspian sea to Europe.

The EU will fund a study into the Trans-Caspian Pipeline and appears to be, in part, a political choice.

"The action has a significant cross-border dimension and intensive coordination activities are on-going with Turkmenistan and Georgia, although cooperation with Azerbaijan has not been demonstrated," the internal commission document said about the project proposal.

"The need for EU co-funding is estimated to be necessary to enable a timely construction, as well as to give a signal to potential, future investors. The execution of the action would be a clear signal to the involved stakeholders and investors that the EU is pursuing the full opening of the potential of the Southern Gas Corridor."

The document said that three other proposals related to the Southern Gas Corridor had been rejected.

Other gas projects will also receive funding, including a study into an offshore pipeline between Cyprus and the Greek mainland via Crete, at a cost of €34.5m.

Russia warns Denmark on gas pipeline

Russia said its Nord Stream 2 gas pipeline might bypass Danish waters, after a new law that increased uncertainty on permits.

EU still giving gas projects 'fast-track' status

The European Commission published on Friday a list of projects of common interest, which receive preferential treatment. Environmental lobbyists accuse the Commission of trying to fool the public with number games.

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