Conference and Plenary Meeting of the PCC in Cyprus Title Speaker: Varnavas Pashoulis Senior Land...

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Conference and Plenary Meeting of the PCC in Cyprus Title Speaker: Varnavas Pashoulis Senior Land Valuation Officer, Valuation Section (BSc Land Mgt, MBA, Proj. Man, MRICS, Member of ΕΤΕΚ) CYPRUS LANDS AND SURVEYS DEPARTMENT CYPRUS LANDS AND SURVEYS DEPARTMENT 13/03/22 1 Natural Gas and the Impact on Property Market in Cyprus

Transcript of Conference and Plenary Meeting of the PCC in Cyprus Title Speaker: Varnavas Pashoulis Senior Land...

Page 1: Conference and Plenary Meeting of the PCC in Cyprus Title Speaker: Varnavas Pashoulis Senior Land Valuation Officer, Valuation Section (BSc Land Mgt, MBA,

Conference and Plenary Meeting of the PCC in Cyprus

Title

Speaker: Varnavas PashoulisSenior Land Valuation Officer, Valuation Section

(BSc Land Mgt, MBA, Proj. Man, MRICS, Member of ΕΤΕΚ)

CYPRUS LANDS AND SURVEYS DEPARTMENTCYPRUS LANDS AND SURVEYS DEPARTMENT

19/04/23 1

Natural Gas and the Impact on Property Market in Cyprus

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Conference and Plenary Meeting of the PCC in Cyprus

Table of Contents

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1. The International and Regional Markets of Natural Gas (NG)

2. The NG reserves found in the Exclusive Economic Zone (EEZ) south of Cyprus

3. The Cyprus Economy and the Property Market4. The impact of the NG on the Cyprus Economy 5. The impact on the Property Market 6. Expected signs of Recovery

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Conference and Plenary Meeting of the PCC in Cyprus

The Intern. Regional Markets of N.G. (cont.)

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Energy PredictionEnergy demand/supply difficult to predict due to the turbulent environment. Examples of failure to predict:

i. Changes in Nuclear Energy - Japan Fukushima accident - high gas demand and prices in Asia- changing policies in EU.

ii. Shale gas in USA the last 5-10 yrs. Investments on import LNG regasification terminals were made and now thinking to export liquefaction facilities

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Conference and Plenary Meeting of the PCC in Cyprus

The Intern. & Regional Markets of N.G. (cont.)

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Non-OECD economies drive energy consumption growth…

• Energy growth 96% from Non-OECD, and 4% from OECD•Gas & non-fossil fuels gain share against coal and oil•Fastest growing energy: renewable 8,2% p.a, NG 2,1% p.a, oil the slowest 0,7% p.a

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Conference and Plenary Meeting of the PCC in Cyprus

The Intern. & Regional Markets of N.G. (cont.)

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source: ExxonMobil 2012 outlook for Energy

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Conference and Plenary Meeting of the PCC in Cyprus

The Intern. & Regional Markets of N.G. (cont.)

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Import dependencies arise in Asia and Europe

BP Energy Outlook 2030

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Conference and Plenary Meeting of the PCC in Cyprus

The Intern. & Regional Markets of N.G. (cont.)

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Europe Energy Demand Vs Supply

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Conference and Plenary Meeting of the PCC in Cyprus

3. The N.G reservoirs in the EEZ of Cyprus

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Granted License for NG exploration

Plot Number(block)

Noble Energy USA (already granted)

12

Eni – ItalyKogas- S. Korea

2-3(under negot.)

Total E&P Activities Petrolieres (operator), NOVATEC Overseas Exploration & Production GMbH and GPB Global Resources BV from Russia

9(under negot.)

Total E&P Activities Petrolieres

11(under negot.)

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Conference and Plenary Meeting of the PCC in Cyprus

The NG reserves found in EEZ of Cyprus

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• Surveys suggest more than 100 trillion cb.f (2.831 trillion cb.m) of reserves in the EEZ of Cyprus

• Equals almost world’s total annual consumption• According to Noble Energy, block 12 only, is estimated to

have mean average of 7 trillion cb.f• LNG Storage plant needed in Cyprus cost: Phase A (6yrs) = 10bn, Phase B = 8bn, Phase C = 6bn • Early October 2012, the government established a new

Hydrocarbon Company (KRETYK), 100% state ownership• NG for domestic use by 2015 and commercial exploitation

by 2019

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Conference and Plenary Meeting of the PCC in Cyprus

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The NG reserves found in EEZ of Cyprus (cont.)

Expected Revenue = International NG prices Vs Extraction cost

Total capacity of 13 Blocks: • 20 yr exploitation life span, 25% ! profit, NG price say $ 3,5bln/tcf ( $ 3,5 - $ 4,25/tcf), USD1,28: EUR1.

Reserve Estimate Reserve Value(EUR bln)

Annual Income(EUR bln)

Gov. Income p.a(EUR bln)

7 tcf 24,5 1,25 0,25

15 52,5 2,65 0,66

25 87,5 4,38 1,1

50 175 8,75 ≃2,19

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Conference and Plenary Meeting of the PCC in Cyprus

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The NG reserves found in EEZ of Cyprus• Forecasting on a 20 yr period ahead is risky• Assuming 50 tcf of reserves, annual income is 2,19bl• Cover gov. budget deficit of 17,5 bn in 5-10 yrs time

horizon (excluding exposure in Greek market)• Subsidiary infrastructure required in Vasiliko area

Vasiliko Area

Energy CenterEnergy Center

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4. The CY Economy and the Property Market

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The CY Economy and the Property Market (cont.)

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The CY Economy and the Property Market (cont.)

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The CY Economy and the Property Market (cont.)

60% up

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Conference and Plenary Meeting of the PCC in Cyprus

Property Market

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70

75

80

85

90

95

100

105

Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012

Apartments Houses Retail Warehouse Office

RICS Cyprus Average price index (All types)

RA

W

HO

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5. Impact of NG on CY Economy Total expected income from N.G exploration

Revenue is to be exploited in three areas (i.e. Norwegian Model)

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Conference and Plenary Meeting of the PCC in Cyprus

Impact of NG on CY Economy (cont.)

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(i) DEFA – N.G. PLC company controlled by state – Totally responsible CY Gas Internal Market – CY Gas Distr. Network

Total Est. cost Total Est. cost € € 500m € € 500m

Phases (A, B, C) Phases (A, B, C) Phase A: €60 mPhase A: €60 m

Compulsory Acquisition of Properties and Rights

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Conference and Plenary Meeting of the PCC in Cyprus

Impact of NG on CY Economy (Cont.)

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(ii.) Submarine gas pipelines (200 km) – Estimated cost € € 1,56 bln(iii.) Exploration (2nd round of license) Expected income from signatures € 200m (iv.) Construct LNG (liquefied) Terminal – Estimated cost €€ 7,8 bln (v.) Demand for specialized services (Financial, legal, real estate, electromechanical, engineering, construction, energy piping, logistics etc). Human Resource Development Authority study: Yrs 2015 to 2019 - 4.000 new jobs(vi.) New dynamic markets for Port Authorities and shipping industry (new ports, jetty, platforms, reservoirs etc)

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Conference and Plenary Meeting of the PCC in Cyprus

Impact of NG on CY Economy (Cont.)

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(vii.) Research, Development and education will be promoted through the N.G activities e.g

University of Nicosia: M.Sc in Oil, Gas and Energy MgtFrederick University: M.Sc in Oil, Gas and offshore eng.University of Cyprus: M.Sc in Petroleum engineeringIntercollege: offers oil and gas Diplomas Disaster management and environmental and seashore pollution issues

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Conference and Plenary Meeting of the PCC in Cyprus R & D Statistics

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0,25 0,26 0,30 0,35 0,37 0,41 0,43 0,44 0,43 0,49 0,50

1,86 1,87 1,88 1,87 1,83 1,83 1,85 1,85 1,92 2,01 2

0,00

0,50

1,00

1,50

2,00

2,50

20002001200220032004200520062007200820092010

R & D as a % of GDP

CY R.D as a % of GDP EU -27

170 177212 227

265 290325

369405 427

456

96

116

159

216

284

345

368

385

355

372

387

105

104

141

175

176

216

237

221

229

265

245

371 397

512

618

725

851

930975 989

1.064 1.088

0

200

400

600

800

1.000

1.200

1.400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Higher Education Graduates 2000-2010

PhD degree holders

Post-graduate degree holders

University degree holders

TOTAL

Linear (TOTAL)

30 yrs to reach EU av.

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Conference and Plenary Meeting of the PCC in Cyprus

5. Impact of N.G on Property Market

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(i.) Need to establish a property strategy to accommodate basic Infrastructure for N.G, thus:• Master plan for the main and subsidiary uses as well as future developments in the area (mainland and sea)•Capacity building•Need to rezone specific areas and define buffer zones• Impact Assessment study for the region• Security and safety measures for the region

(ii.) Land Acquisition Issues (compulsory acquisition, Land Assembly, Reclamations, buy/sell/lease, property rights)

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Conference and Plenary Meeting of the PCC in Cyprus

Impact of NG on CY Property Market (Cont.)

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Calendar of Activities/Events Year (timing)

Investment cost Effects

1.(a) Construction : Phase A: New 20 oil tanks at Vasiliko (357.000 m3) and 1,2 Km jetty-VTTV Vasiliko Ltd

2012-2014

€300 m1.000 casual jobs, 60 perm.

Improve current economic climateEst. Gov. Rev. €16 m p.a.

(b)Phase B: Another 9 oil tanks at Vasiliko (286.000 m3)

1st Qrt. 2014

Improve current economic climate

2.(a) New - CY N.G Distribution Network infrastructure (Phase A)

2013-2014

€65m >> >>

(b) CY N.G Distribution Network infrastructure (Phase B and C)

2018- €500m >> >>

3. Development of LNG Terminal for internal use and exports

2013 -2019

€10blns Economy is expected to improve

4.(a) Estimated Revenue per year (b) Rprt my Merrill Lynch on viability of CY – Expected Revenue

2018 - €2,2 bln p.aBetween €1.7 to €2.4 billion p.a

Repayment of CY debtBanks €10 blnGov. maturing debt €6blnGov. public fin. €1,5 bln

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Impact of NG on CY Property Market (Cont.)

Oil tank investments at Vasiliko by VTTV

Distribution of CY Gas on mainlandEnergy Center

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Conference and Plenary Meeting of the PCC in Cyprus

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6. Expected Signs of Recovery

Signs of recovery will first appear in the industrial market, then commercial and finally residential and tourist

market as a derived demand

The speed of recovery will depend on the strategies and actions to be followed by the gov. to promote and secure:

Financial stability Real development growth on the island Reorganize gov. and semi gov. Sectors (not excluding part privatization i.e. 20%) Service based economy & Tourist/Marina/sailing destin. Modernize the existing econ. model (comp & comp. adv.) Managing Resources (natural, HR) R & D, etc

Forecasted Real signs of ECO/PROP recovery after 2015

Page 26: Conference and Plenary Meeting of the PCC in Cyprus Title Speaker: Varnavas Pashoulis Senior Land Valuation Officer, Valuation Section (BSc Land Mgt, MBA,

Conference and Plenary Meeting of the PCC in Cyprus

6. Expected Signs of Recovery - Property Cycles

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Where are we .! The question is the timing for recovery ! Where are we .! The question is the timing for recovery ! What do we until then ! And how we manage and best What do we until then ! And how we manage and best

utilize our resources……..!utilize our resources……..!

!

Page 27: Conference and Plenary Meeting of the PCC in Cyprus Title Speaker: Varnavas Pashoulis Senior Land Valuation Officer, Valuation Section (BSc Land Mgt, MBA,

Conference and Plenary Meeting of the PCC in Cyprus

THANK YOU FOR YOUR ATTENTION THANK YOU FOR YOUR ATTENTION

WELCOME TO CYPRUS WELCOME TO CYPRUS