Archive for April, 2014

A deicison by Israel’s Delek energy group to bid for Cyprus’ interim gas solution could serve as the first step for future export deals, the Jerusalem Post reported.

“The construction of a pipeline from Leviathan to Cyprus for small annual imports on the island might pave the way for larger opportunities,” a report said this week.

“The Leviathan partners (Delek Group and Houston-based Noble Energy) may want to try to get a foot in the door,” it added.

Supplying some gas from the Leviathan field to Cyprus could serve as the first step to having this added option of piping more gas from the Israeli plot there for a potential future export facility.

The bailed-out island’s Natural Gas Public Company announced last week that four proposals had been received for the temporary supply of natural gas for power generation.

And that the government’s goal is to have natural gas used in electricity generation in Cyprus – whose electricity is Europe’s most expensive – by 2016.

The tender requirements are for natural gas supply to be delivered at the station boundary at Vasilikos power station in Limassol.

In a Tel Aviv Stock Exchange (TASE) report, Delek and Noble Energy which are also exploiting Aphrodite field offshore Cyprus said they responded to DEFA’s tender on Monday.

“The tender calls for the supply of between 0.7 and 0.95 billion cubic meters of natural gas annually to the Cypriot market through two delivery routes, one that will begin supplying the resource in early 2016,” the report said.

“And the other in no later than the second half of 2017. Initially concluding at the end of 2022, the tender includes a possibility of three one-year extensions through the end of 2025,” it added.

The offer of the Leviathan partners is contingent upon, among other things, a binding agreement occurring between the bidders and the Cypriot government no later than August 21, 2014, the TASE report said.

Financial closure on the Leviathan reservoir’s development and the pipeline construction, as well as receipt of necessary Cyprus government approvals, would also need to occur by this point, it added.

Noble Energy owns a 39.66% portion of the 535-billion cubic meter Leviathan field, while Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each hold 22.67%.

The Jerusalem Post report contradicts a recent Reuters story that Israel had put previous plans to pump its gas reserves into a future export plant in Cyprus on the back burner.

And that this dealt a major blow to the indebted island’s ambitions to become a global player in the gas market.

An LNG export plant at Vasilikos is due to deliver at least 5 million tonnes a year to Europe and Asia, allowing Europe to reduce its growing dependency on Russia.

Cyprus’ legal and tax systems are the main attraction for potential foreign investors, government sources said Friday – the last day of an exploratory visit by Kuwaiti investors.

But President Anastasiades again sent a cautiously optimistic message saying that Cyprus offers plenty of investment opportunities but feet should be kept firmly on the ground.

“I hope that at some point we will have something positive to announce. We will not give up efforts, we will try our best to attract inflow of foreign capital into the country,” he said.

“There is great interest but we are still at an exploratory stage. Let us not create illusions to the people. This is not our intention,” he added.

As for Energy Minister George Lakkotrypis he repeated on state radio that Kuwait’s investment fund representatives are interested in the energy sector and mainly petrochemicals which produce ammonia for fertilisers. And this requires the availability of cheap onshore natural gas reserves, he added.

The Kuwaitis are also interested in golf courses, the marinas and other large development projects related to tourism and which are already underway.

“All indications whether these concern upgrades or the performance of Cyprus bonds overseas or other evidence shows foreign investors that this is a very good time to invest in Cyprus,” Lakkotrypis said.

Nonetheless, the Kuwaitis turned down Anastasiades’ invitation to extend their stay in Cyprus for another two days so as to be provided with additional demonstrations on the island’s investment climate.

They had already committed themselves to visiting other countries, the sources said before adding that the Kuwaitis promised to come back soon. In addition, investors from the United Arab Emirates and Dubai are also due to visit Cyprus next month.

According to the Central Bank of the Russian Federation, there was a significant increase in investment into Russia from Cyprus during the first nine months of 2013, the latest period for which figures are available.

In the first three quarters of 2013 net inward investment from Cyprus to Russia amounted to US$ 12.9 billion, making Cyprus the second largest source of investment into Russia. The only country with a larger figure was the United Kingdom, which was boosted by the one-off TNK-BP transaction. There was a considerable gap between Cyprus and the next country, Luxembourg, with less than US$ 10 billion.

Cyprus’s investment of US$ 12.9 billion for the first three-quarters of the year is almost as large as the figure for the whole of 2011, which means that 2013 will almost certainly be a record year for investment into Russia via Cyprus since the onset of the global economic crisis in 2008.

These figures provide welcome reassurance that, despite the “bail-in” of March 2013, Cyprus continues to be the preferred route for investment into Russia.

It is reported in the Indian financial press that Cyprus and India will finalise the amendments to their double taxation avoidance agreement in the next few weeks. The Indian High Commissioner to Cyprus has said that a team from the Indian ministry of finance is expected to visit Cyprus in the next few days to carry forward the negotiations to finalise the revised DTAA, and that the matter is being followed at the highest level in the government of Cyprus. The existing DTAA between India and Cyprus was signed in 1994, and it is understood that the amendments will incorporate the provisions of Article 26 of the Organization of Economic Cooperation and Development’s model tax convention relating to exchange of information.

The conclusion of the agreement will resolve differences between the two countries’ tax authorities that led to Cyprus being declared a notified jurisdiction under Section 94A of the Indian Income Tax Act of 1961, making it more cumbersome for Indian taxpayers to claim deductions on transactions with entities based in Cyprus, and increasing reporting requirements. Both Cyprus and India have agreed that the classification of Cyprus as a notified jurisdictional area will be rescinded with retrospective effect from 1 November 2013, the date when the notification was first issued. The rescission will remove bureaucratic obstacles and reduce compliance costs.

According to Indian government estimates, Cyprus is the seventh largest investor in India with cumulative investments of US$7.2 billion between April 2000 and December 2013.