If one told you 10 years ago that Cyprus would position attractively as a promising new player in the energy market, you would probably think they are speaking nonsense. However, the identification of natural gas reserves in Cyprus’s declared EEZ, has converted this island-Republic at the far eastern borders of the EU to a focal European partner contributing to an incessantly updated energy agenda, which is not independent of environmental considerations, and certainly, ongoing geopolitical developments affecting the Continent. Dr Loukas G. Glyptis* writes:
An indicative demonstration of Cyprus’s active role in the energy agenda of the area, is its involvement along with Greece, Italy, Croatia and Slovenia in ‘Poseidon Med’, a 2-year project co-financed by the EU with an estimated cost of €0.5bn, and which is aimed at facilitating the introduction of LNG – the cleanest burning fossil fuel – as an efficient and competitive energy source in Eastern Mediterranean and the Adriatic Sea.
The project is the first of its kind in Europe and can be seen as an outcome of a series of EU Directives, implementing the Union’s environmental and energy sustainability policies. It is worth noting that such Directives impose the drastic reduction of emissions in the Union’s Emission Control Areas by 80% in 2050 compared to what they were in 1990. At the same time, the EU recognises an imposing need to rely less on heavy fuel as a primary source of energy and, to this end, it has taken policy initiatives such as the Directive 2014/14/94, which requires member States to develop alternative fuel infrastructure. A manifestation of this new strategic direction of Europe is the provision of funding to support projects in the area of alternative energy sources and infrastructure.
In this respect, Poseidon Med, a Lloyd’s List Greek Shipping Awards winner for 2014, is the “first Cross European Border project which aims to introduce LNG as the main fuel for the shipping industry and develop a sufficient infrastructure of bunkering value chain” (www.poseidonmed.eu, accessed 16 September 2015). Following a consultation event in Zapeion Hall in Athens, the project’s Consultation Event for Cyprus took place on 16th September in Limassol at the Columbia Plaza state-of-the art building. The Event revolved around the outcomes, financial and technical challenges, as well as the ways forward, which distinguished representatives of local and international stakeholders discussed with a view to underpinning the project’s overarching philosophy, i.e. that LNG adoption and relevant infrastructure implementation are enablers of efficiency, competitiveness and compliance with the directives of the EU and IMO. Apart from the political administration of the member countries, the project has been also partnered by key stakeholders in the shipping community, which aspire to sharpen their know-how, LNG infrastructure, and overall, their competitive edge in the post conventional fossil fuels (i.e. heavy fuel, coal) era. Such partners include, among many others, the Piraeus, Limassol, La Specia, Venice and Trieste Port Authorities; short sea shipping companies, including Minoan Lines, Superfast Ferries, ANEK Lines, Salamis Cruises, Hellenic Seaways; and Lloyd’s Register, the famous learning provider on classification standards. The event speakers, overall, emphasised the necessary planning and action needed in order to establish an integrated bunkering LNG supply chain in Eastern Med and the Adriatic Sea, which will boost EU’s energy diversification policy and its promised social, environmental and economic benefits.
In particular, Poseidon Med, which will culminate in December 2015, has set as its primary target the development of a sustainable market for LNG in the aforementioned region. To this end, the already established LNG terminal at the islet of Revithoussa in the Megara Gulf in Greece, which is strategically proximate to the port of Piraeus, was shown to play a promising role in promoting LNG as a marine fuel in the region by supplying the core ports of the partner countries, e.g. Venice, Trieste, La Specia, Limassol, Thessaloniki, Herakleion. Further, the project has engaged with the demonstration of the financial and technical feasibility of LNG integration in the bunkering supply chain through pilot cases. For example, it has considered scenarios involving the technical options and the consequent financial implications regarding the conversion of short sea vessels to LNG-powered ones or the bunkering options for the port of Limassol in Cyprus (ship-2-ship bunker option via LNG imported by feeder vessels from Revithoussa or even from Egypt and Israel Vs the much debated ashore LNG storage at Vasilikos area), which is experiencing a rapid increase in LNG demand. The speakers emphasised the strategic role that the port of Limassol can potentially play in the Eastern Med region, by acting as the only LNG storage and bunkering port of the EU. On the other hand, speakers from the Port Authorities of Adriatic Sea ports underlined the added value of the project’s conclusions when it comes to the positive environmental and consequent financial effects of LNG diffusion to their area.
At a minimum, the Poseidon Med consultation event raised awareness of LNG’s promising potential, despite the vastly resurged financial attractiveness of heavy fuel nowadays. The partners after all, have reasons to be proud in that their LNG integration initiative has been further reinforced by the EU, which recently approved the project’s heir, namely Poseidon Med II, which will be of 5 years long and with a budget exceeding €53mn. Poseidon Med II aims at facilitating LNG adoption in bunkering operations, design the extension of the Revithoussa Terminal with capacity to load bunkering vessels (feeders), and develop sustainable financing options to support the vessel and port installations.
*Dr. Loukas G. Glyptis is a Lecturer of Accounting & Finance at UCLan Cyprus and is an active researcher on matters of Shipping supply chain management and efficiency.