KODAP and EIB sign an agreement for financial support of 35 million euro for new emergency oil reserve facility

Cyprus Organisation for Storage and Management of Oil Stocks (KODAP) and the European Investment Bank (EIB) have signed an agreement for a financial support of 35 million Euro for expansion of strategic oil reserves in Cyprus. The agreement was signed Tuesday in Nicosia by Panagiotis Malekos, Chairman of KODAP and by Jonathan Taylor, European Investment Bank Vice President responsible for lending operations in Cyprus, in the presence of Yiorgos Lakkotrypis, Minister of Energy of the Republic of Cyprus.

Management of strategic oil reserves in Cyprus will be transformed through construction of a new EUR 53 million emergency energy facility enable Cyprus to hold one month of emergency oil supplies. The new EIB financing represents the first infrastructure scheme in Cyprus to be supported by the Investment Plan for Europe initiative.

Speaking at the event, Lakkotrypis said that the energy sector in Cyprus is currently undergoing major changes, and this partly explains why the Government has decided on the need to create the Energy Centre at Vasilikos. Our principal policy objective, I have to point out, is to transform Cyprus into the energy hub of the Eastern Mediterranean region, he said.

He pointed out that with regard to the internal energy market, the Council of Ministers decided last year on the import of LNG in Cyprus, as well as on the development of the necessary infrastructure, namely a Floating Storage and Regasification Unit, a jetty intended for the Unit’s safe mooring and, finally, the required pipelines, all to be installed at the Vasilikos area. At first, he explained, LNG will be used for power generation at the nearby Vasilikos Power Station, whereas, in parallel, the national natural gas pipeline network will be developed.

The Minister noted that in order to implement this infrastructure by 2020, we have been awarded a grant from the Connecting Europe Facility, for the amount of Euros 101 million. A total of around Euros 250 to Euros 300 million is estimated to be required for the entire project of importing LNG to Cyprus, and presently we are in discussions with EIB regarding the Bank’s involvement in its financing, he added.

The Vice President of EIB said that investment to ensure security of energy supply is crucial to avoid disruption and safety of strategic facilities. The European Investment Bank is pleased to work with Cypriot partners to transform critical energy storage at Vasilikos. This is an impressive project that demonstrates best practice and world class safety standards, he said.

Taylor noted that the 35 million euro long-term EIB financing represents our largest support for energy investment in Cyprus for more than 5 years and is the first infrastructure project in Cyprus backed by the Investment Plan for Europe..

Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said: “The EUs Energy Union strategy aims to make energy more secure and affordable. This first EFSI project in Cyprus with KODAP will help us meet those goals. I encourage more project promoters in Cyprus to contact the EIB with their investment proposals in order to continue boosting growth and creating jobs.”

Malekos, in his speech said that the operation and ownership of KODAPs owned and dedicated storage facility has many important benefits. Financially, the project has an unusually comfortable net Present Value in excess of 70 million Euro. This financial saving will, over time, translate to reduced cost of energy security for the Cyprus citizens.

Additionally, he went on to say, business and commercial uncertainties are drastically reduced

Furthermore, Malekos said, availability of additional storage capacity at Vasilikos, facilitates the government plan to move away from outdated storage facilities in Larnaca and to free up scarce and sought-after coastal land, to be redeveloped for touristic and residential use.

Source: Cyprus News Agency