Russia and Cyprus have always been close partners and cooperation between Moscow and Nicosia was reinforced following the meeting between Russian President Vladimir Putin and his Cypriot counterpart Nicos Anastasiades at the Kremlin on October 24.

“There has always been strong political cooperation between Cyprus and Russia and the meeting between Presidents Putin and Anastasiades, and its outcome, is a good indication of this,” Cyprus Natural Hydrocarbons Company CEO Charles Ellinas told New Europe on October 25. “However, so far it has not translated into any tangible cooperation on energy issues,” he added. Russian oil major LUKoil is the only significant Russian energy company operating in Cyprus – it owns a chain of petrol stations, Ellinas said, adding that Russia’s Novatek and Gaszprobank bid during the first offshore licensing round but were not successful. “There ware no Russian bids during the second round, despite the fact that the Russian Ambassador in Cyprus supported participation,” Ellinas said, adding that energy efficiency projects are simply too small to attract serious interest.

The CEO of Cyprus Natural Hydrocarbons Company CEO stressed that further cooperation between Russia and Greece is much more likely and more serious. Ellinas reminded that not only Russian gas monopoly Gazprom is already active, but also there are discussions to transport gas from the second string of TurkStream natural gas pipeline through Greece to Italy.

According to Gazprom, TurkStream is a new export gas pipeline stretching from Russia to Turkey across the Black Sea. The first string of the pipeline is intended for Turkish consumers, while the second string will deliver gas to southern and southeastern Europe. The first and second strings of TurkStream will have the throughput capacity of 15.75 billion cubic metres each.

In December 2016, South Stream Transport BV, which is a wholly owned subsidiary of Gazprom, and Allseas Group SA signed the contract to build the first string of the TurkStream gas pipeline’s offshore section with an option for laying the second string. On May 7, 2017, construction of the TurkStream gas pipeline was commenced in the Black Sea near the Russian coast.

Ellinas said that not only Greece is very keen on this but also Italy, which wants this for security of supplies reasons but also in order to reduce costs, in comparison to gas coming from the north through Austria.

He reminded that Gazprom, Greece’s DEPA and Italy’s Edison signed Memorandums of Understanding to this effect. “The Italian Energy Minister also had discussions with his Russian counter-part pushing for this. Italy believes it can overcome any EU resistance to such a project,” Ellinas said, adding that Gazprom is also involved indirectly in the Alexandroupolis Floating Storage and Regasification Unit (FSRU) through Greek private limited company Gastrade SA and its joint venture with Greek conglomerate Kopelouzos Group.

“I do not believe any of these developments impact the East Med. Egypt is forging ahead, but Israel and Cyprus are stuck in terms of securing exports,” Ellinas said, responding to a question from New Europe. “Political or EU support is not sufficient to move this forward. Such projects must become commercially viable if they are to materialise, and they are not. They cannot secure firm gas sales in the developing global low gas price environment, unless they cut costs dramatically,” he said, adding that with renewables penetration increasing and unstoppable and an increasing glut of gas supplies gas prices will stay low forever.

He noted that in order to secure sales to Japan, Houston-based Tellurian LNG has just announced that it can deliver liquefied natural gas at $6/mmBTU. “East Med LNG needs to compete at this level if it is to succeed,” Ellinas said.

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