The document summarizes options for monetizing natural gas resources discovered in Cyprus. It discusses establishing a liquefied natural gas (LNG) terminal as the priority, while also considering a pipeline to export gas to markets in Europe and Turkey. Regional markets for gas exports via pipelines and compressed natural gas are also examined. The document concludes by emphasizing the need to exploit Cyprus' resources through partnerships with Israel and export opportunities to Europe and regional markets.

1. Cyprus Gas Monetization Options
Nicosia 15H December 2014
Under the auspices of the Cyprus Chamber of Commerce and Industry
Presented by: Andy Varoshiotis BSc, MBA, IAFP, EIET, MSDT
Energy Technology - Strategy – Energy Financial Services
ANNUAL GENERAL MEETING 2014
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2. GLOBAL ENERGY TRENDS
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3. GLOBAL ENERGY TRENDS
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4. SHALE GAS REVOLUTION
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GLOBAL ENERGY TRENDS

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GLOBAL ENERGY TRENDS

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GLOBAL ENERGY TRENDS

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GLOBAL ENERGY TRENDS

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GLOBAL ENERGY TRENDS

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GLOBAL ENERGY TRENDS

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GLOBAL ENERGY TRENDS

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OIL SUPPLIERS

13. What determines the price of natural gas?
A1: what is ‘natural gas’? – need to be specific – e.g. if quoting ‘Henry Hub’ gas
• traded in 10,000 MMBtu increments, quoted in MMBtu’s
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• a particular quality:
– energy content (BTU’s), typically determined via in-line GC
• at a particular place:
– Henry Hub = Sabine Pass Pipe Line LLC, near Erath, LA
• at a particular time:
– spot market
– futures contracts for various months, up to 10 yrs' out

14. Note: Confidence interval derived from options market information for the 5 trading days ending Dec. 4,
2014. Intervals not calculated for months with sparse trading in near-the-money options contracts.
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Henry Hub Natural Gas Price
dollars per million Btu
12
10
8
6
4
2
0
Historical spot price
STEO forecast price
NYMEX futures price
95% NYMEX futures upper confidence interval
95% NYMEX futures lower confidence interval
Jan 2013 Jul 2013 Jan 2014 Jul 2014 Jan 2015 Jul 2015
Source: Short-Term Energy Outlook, December 2014.

15. MONETIZING
CYPRUS
NATURAL GAS
RESOURCES
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“Building the new energy economy”

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GLOBAL NATURAL GAS DEMAND
With demand rising at an average rate of over 2% per year for more than thirty
years, natural gas is the fossil energy with the most dynamic growth. Given the
projected 65% rise in gas consumption between 2004 and 2030* against the
backdrop of a tightening oil market, the development of natural gas is becoming a
major challenge – and opportunity – for all oil companies.
This momentum is driven by the many advantages of natural gas. It is clean,
producing no unburned particles, dust or soot in the combustion process and
releasing less greenhouse gas than the other fossil fuels. It is also efficient, notably
permitting advanced-technology power plants to attain very high efficiencies with
lower energy consumption and reduced emissions to the atmosphere. For electric
power generation, the use of gas is thus projected to grow from 20% in 2004 to 23%
in 2030.
Source: Total EP

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18. The (a) confirmation of significant quantities of hydrocarbons in Cyprus, (b) the
scientific estimates of equally significant quantities in the south and southwest of the
Greek island of Crete and (c) the officially declared increased cooperation between
Cyprus, Israel and Greece to jointly exploit their hydrocarbon deposits may prove to
be a tremendous opportunity not only for Cyprus, Greece and Israel but for the EU as
a whole.
Moreover the resent cooperation between Cyprus – Greece - Egypt adds’ a new
Frontier in the East Med Energy map and a new strategic energy corridor in Europe.
Combined sources from qualified institutions (i.e., The U.S. Geological Survey,
BEICIP/FRANLAB, the Institut Français du Pétrole) and entities of science (i.e., Paper by
Bruneton, Konofagos and Foscolos titled “Cretan Gas Fields – A new perspective for
Greece’s hydrocarbon resources”) estimate that the Levantine Basin, the Nile Delta
Cone, the Eratosthenes Continental Block, the Herodotus Basin and the
Mediterranean Ridge, may hold more than 50 trillion cubic meters (tcm) o N. Gas.
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EAST MED DIMENSION

19. CYPRUS EEZ EXPLORATION ACTIVITIES
Source: Ministry of Energy, Commerce, Industry and Tourism.

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Cyprus
Aphrodite - Block 12
“A New Milestone in Cyprus History”

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CYPRUS AS A DISTRIBUTION HUB

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CYPRUS AS EU’S ENERGY SUPPLIER?

26. LNG TERMINAL – MARKET OUTLOOK
• According to the IGU World LNG Report, Qatar was by far the largest LNG exporter
in 2013 (32.6% of global supply). Other major exporting countries are Malaysia, Australia
and Nigeria. In 2013 there were about 85 regasification terminals worldwide, a figure that
includes a number of regasification vessels in South America. With 27 regasification plants,
Japan has the largest number of plants of any country
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Liquefaction plants
• According to available statistics, in 2013 there were approximately 30 liquefaction plants
for LNG export in operation worldwide. Total global liquefaction capacity is set to grow
significantly in the short term, because a number of new terminals are already planned.
A good example is Australia, where about 10 terminals are currently under construction
or planned. Compared with the three plants currently in operation, this can be regarded
as a massive increase in supply.
Shipping
• After liquefaction, the LNG is exported overseas by LNG carrier. The total fleet presently
comprises approximately 360 ships. Of these, around 70 are over 20 years old and these
will probably need to be replaced over the next 10 years.

27. VASSILIKOS LNG - TERMINAL PROPOSAL
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28. EXPORTING POSSIBILITIES Modular (LNG)
Pluto LNG, Australia (Modular LNG success) Concept design, FEED and EPCm of this
greenfield LNG facility in Western Australia. The Pluto LNG facility was successfully
started up and loaded its first cargo in May 2012.
The project includes a single LNG production train with nameplate capacity of 4.3
million tonnes of LNG per year, gas reception facilities, a fractionation unit, an acid
gas removal unit, gas treatment units, tank storage facilities, a loading berth, gas
turbine power generation units and utilities.
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30. COMPRESSED NATURAL GAS (CNG) FOR
EXPORT TO REGIONAL MARKETS
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Source: SEANG

31. LNG CARRIERS & FSRU
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“More importers who can’t commit to costly
long term projects are looking at FSRUs”

32. LNG CARRIER MARKET SNAPSHOT
• 3 New additions to the global LNGC fleet, 374 vessels in total.
• Order book for new vessels expanded to 121 units.
• Spot charter rates still weak amid vessel oversupply and limited spot
cargo Opportunities, situation likely to endure in 2014.
• The upheaval in the global gas market this year is also being felt in the
LNG shipping market. LNG charter rates have sunk in 2014 alongside gas
prices.
• Spot charter rates have fallen from levels around 90,000 – 100,000 $/day
in 2013 to around 50,000 $/day last month. 12 month term charter rates
have also fallen to Around 58,000 $/day.
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33. LNG CARRIER MARKET SNAPSHOT
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34. Cyprus Shipping Ranks No 3 in EU in the 10 top in the World
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35. EAST MED Pipeline to Europe? Geopolitical
Debate?
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The priority is to build a liquefied natural gas (LNG) terminal, but a pipeline
could have advantages for Europe.

36. Pipeline to Turkey? Geopolitical Debate
The numbers are there. Israel's current gas reserves total 25-37 trillion cubic feet.
Cyprus, still in the early exploration phase, claims it has 60 tcf. The U.S. Geological
Survey said in 2010 the Levant Basin, which covers Israel, Cyprus, Syria, Lebanon and
the Gaza Strip, contains an estimated 123 tcf.
The Republic of Cyprus reportedly rules out allowing a pipeline to Turkey through its
exclusive economic zone until there's been a settlement to the Cyprus Problem.
According to some analyst’s Israel's not likely to agree to a costly LNG plant on
Cyprus if there's no pipeline to Turkey.
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Read more: http://www.upi.com/Business_News/Energy-Resources/2013/09/25/Israel-sees-Turkey-Cyprus-settlement-
as-key-to-gas-exports/UPI-14461380138601/#ixzz2mUqYDxQz

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LNG BANKERING - INFRASTRUCTURE
The upcoming ECA standards are coming into force on
January 1, 2015 and according to the UK Transport
Select Committee, this will trigger an 87% rise in annual
fuel bills for the shipping industry. LNG, seen as one of
the most economical and environmentally viable fuels,
offers the most plausible solution to this.
Vasilikos Energy Hub

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VASSILIKOS ENERGY PORT PROPOSAL

39. CONCLUSIONS AND KEY POINTS
• Indications are good that substantial quantities of gas will be found to boost exports.
The key question is not whether Cyprus has gas but how best to monetize it. There is the
option of regional markets but the Tamar and Leviathan partners are cornering these
very rapidly.
• Global markets are changing rapidly and are becoming more competitive. With shale gas
and an expected glut of LNG it has become a buyers’ market out there, with prices in
Asia-Pacific right now around $11 per mmBTU and in Europe as low as $7 per mmBTU.
• Cyprus gas is indigenous to the EU and thus it should be able to contribute to EU’s
energy security, but the price must be right both for the EU but also for Cyprus. After all
Cyprus is looking to gas to eventually help its economy to get out of its present troubles.
• Israel will need Cyprus to exploit its resources by employing the right size company to
construct e.g., LNG or gas-to-liquids (GTL) plants. The size of the resources cannot allow
them to even remotely be consumed domestically; export is the only option. The Cypriot
and Israel reservoirs should be unified; they are geologically contiguous anyway. Cyprus,
in turn, will need the shield provided by Israel in relation to saber rattling Turkey. The
Israeli-Cypriot marriage is made in oil and gas.
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40. CONCLUSIONS AND KEY POINTS
• As Noble Energy and its partners have demonstrated with Tamar and Leviathan exports,
there is a thriving regional market for East Med gas. And pipelines, and CNG naturally
lend themselves as an ideal means to export gas to these regional markets.
• Small scale LNG and CNG, or FCNG, are alternative options to be considered for the
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development of East Med gas exports.
• Egypt has two hardly used land-based LNG facilities at Damietta and Idcu due to lack of
gas. MOUs have been signed to send Tamar and Leviathan gas for liquefaction at these.
• EU gas demand has decreased and as a result prices have come down, but dependence
on Russian gas remains and may be unavoidable.
• Cyprus is well placed for companies who will come to the region to service this sector to
base their operations. Cyprus Oil & Gas Association can help such companies cut
through red tape and expedite the process.

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Ordinary Members:
Any multi-discipline Oil & Gas operator, drilling company, seismic data provider,
petrochemical laboratory, importer or exporter of petrochemical products, land
storage carriers, field licensee, equipment manufacturer, by-product engineering
company, oil and gas consulting firm, marine engineering, oil and gas shipping, LNG
bulk carriers, oil tanker operators, company that provides services to clients in the Oil,
Gas and Petrochemical industry and satisfies the following conditions is eligible
for Each applicant, as described above, shall be reviewed and approved by the Board
of Directors.
Associate Members:
Associate Membership will be opened to all service providers, engineering companies
providing services to the Oil, Gas and Chemical Industry but not eligible to join as
Ordinary Members.

42. THANK YOU FOR YOUR ATTENTION
Cyprus Oil & Gas Association
Member Services & Inquiries
CCCI Head office
Deligiorgis 8, & Grivas Dhigenis
Nicosia
Cyprus
E-Mail Address: avaroshiotis@cyoilgas.org
Dept. of Services and Trade
Cyprus Chamber of Commerce and Industry
Andreas Andreou
Direct Line: +357 22 889706
E-Mail Address: andand@ccci.org.cy
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