Cyprus wants unchanged cost agreement for link with Crete

Though a new application submitted by EuroAsia Interconnector, a consortium of Cypriot interests, to the EU’s Connecting Europe Facility for funding support concerning an electricity grid interconnection project to link the Greek and Cypriot systems has yet to be examined or reciprocated by the European Commission, Greece and Cyprus have already begun talks on how to divide the remainder of the project’s costs not covered by the CEF.

The Cypriot side, which took the initiative for these talks, appears determined to ensure that Greece will stick to its share of the cost under the terms agreed to when the project also included the Athens-Crete link as part of a wider plan to interconnect the Greek, Cypriot and Israeli systems.

EuroAsia Interconnector head the wider Greek-Cypriot-Israeli plan. Greek power grid operator IPTO withdrew the Athens-Crete segment and is now working on it as a national project. IPTO is aiming for swifter progress on this section, urgently needed to resolve Crete’s pressing energy sufficiency issues.

Cyprus’ Regulatory Authority for Energy, RAEK, has forwarded to its Greek counterpart RAE a text presenting its cost-related views. RAEK wants to ensure that a Cross Border Cost Allocation agreement signed by the two sides late in 2017 for the Greek-Cypriot link, running from Crete to Cyprus, remains valid, despite Greece’s withdrawal of the Athens-Crete section.

According to the CBCA agreement, Cyprus will take on 63 percent of the cost of the Crete-Cyprus link and Greece will be responsible for the other 37 percent, under the condition that 50 percent of the total cost will be covered by EU funds, through the CEF.

The Crete-Cyprus interconnection is budgeted at 1.5 billion euros, meaning Greece’s share will be approximately 280 million euros.

This amount will be incorporated into IPTO’s accounts and need to be recovered through network surcharges included in consumer electricity bills, seen as a delicate matter by the Greek government.

Greek authorities have yet to respond to RAEK’s initiative as they await news from the European Commission on the CEF request.

Euroasia seeks restart in Cretan link talks, IPTO remains firm

The Euroasia Interconnector consortium has requested a restart of failed negotiations concerning the development of Crete’s major interconnection planned to link the island’s power grid with Athens, sources have informed.

Negotiations between the Euroasia Interconnector and IPTO, Greece’s power grid operator, both seeking control of the Cretan major interconnection project’s development, fell through less than a fortnight ago, and, in response, the European Commission gave RAE, Greece’s Regulatory Authority for Energy, two months to decide on how the Cretan segment of the wider Euroasia Interconnector project will be developed and by whom.

The wider Euroasia Interconnector project, a PCI-status project awarded to the Euroasia Interconnector consortium, is planned to link the Greek, Cypriot and Israeli power grids via Crete.

In the ordeal’s latest development, the Euroasia Interconnector consortium has just forwarded a letter to all parties involved – the European Commission, ACER (Agency for the Cooperation of Energy Regulators), RAE and its Cypriot counterpart RAEK, as well as IPTO – seeking fresh talks following the recent breakdown.

The Euroasia Interconnector consortium, in its letter, appears willing to accept a minority role for the Cretan segment of the wider interconnection project but insists on having a say in interoperability matters and project specifications.

In the letter, the Euroasia Interconnector consortium also doubts a recent ACER update  contending the Greek-Cypriot-Israeli interconnection has fallen well behind schedule and, furthermore, questions whether RAE has the authority to become involved in decisions concerning the project’s Cretan interconnection segment.

The Euroasia Interconnector consortium, in the letter, insists on the staging of a tender for all the project’s converters. This is one of the contentious issues that has troubled the consortium’s negotiations with IPTO as the power grid operator views the stance as pressure by Euroasia Interconnector for control over technical specifications and tenders concerning the project.

IPTO sees no reason to reconsider or change its course as a result of the letter, sources noted. Negotiations between the two sides broke down at a meeting on July 12.

Prior to the collapse, IPTO proposed the establishment of a special purpose vehicle (SPV), which the Greek power grid operator would control with a majority stake, to finance, develop and operate the Cretan interconnection. Regulators and the European Commission viewed the IPTO proposal as the only basis for negotiations before the breakdown.


Cyprus taking on East Med investment, operational costs

Cyprus willl take on investment and operational costs that may arise for East Med, a prospective pipeline to carry southeast Mediterranean natural gas deposits along a route stretching from Israel to Europe, RAE, Greece’s Regulatory Authority for Energy, and RAEK, its Cypriot counterpart, have agreed.

Both authorities also agreed that the division of the project’s overall cost is substantiated, making conditions mature for the project’s development to commence.

IGI Poseidon, a 50-50 joint venture comprised of DEPA, Greece’s Public Gas Corporation, and Italy’s Edison, is promoting the East Med pipeline.

At present, preliminary deep-sea survey work is being planned around Cyprus and Crete to determine the pipeline’s route.

Then, the next step, scheduled for December, will entail a four-way meeting to bring together the energy ministers of Greece, Cyprus, Israel and Italy for the signing of a Memorandum of Understanding.

The East Med pipeline is planned to cover about 1,900 kilometers and connect east Mediterranean deposits with western Greece via Cyprus, Crete and the Peloponnese.

Its annual transmission capacity is planned to measure 10 billion cubic meters. The pipeline will be designed to enable a capacity increase to 16 billion cubic meters if needed. Studies conducted so far indicate the project’s construction cost could reach 6 billion euros.

Officials plan to utilize prospective interconnections towards Bulgaria (IGB), Albania (IAP) and Italy (ITGI).

East Med was classified as a Project of Common Interest (PCI) by the EU in 2013, a decision that facilitates EU funding, while an EU-financed feasibility study was completed last year.