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 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
Conference and Plenary Meeting of the PCC in Cyprus
Table of Contents
19/04/23 2
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
Conference and Plenary Meeting of the PCC in Cyprus
The Intern. Regional Markets of N.G. (cont.)
19/04/23 3
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
Conference and Plenary Meeting of the PCC in Cyprus
The Intern. & Regional Markets of N.G. (cont.)
19/04/23 4
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
Conference and Plenary Meeting of the PCC in Cyprus
The Intern. & Regional Markets of N.G. (cont.)
19/04/23 5
source: ExxonMobil 2012 outlook for Energy
Conference and Plenary Meeting of the PCC in Cyprus
The Intern. & Regional Markets of N.G. (cont.)
19/04/23 6
Import dependencies arise in Asia and Europe
BP Energy Outlook 2030
Conference and Plenary Meeting of the PCC in Cyprus
The Intern. & Regional Markets of N.G. (cont.)
19/04/23 7
Europe Energy Demand Vs Supply
Conference and Plenary Meeting of the PCC in Cyprus
3. The N.G reservoirs in the EEZ of Cyprus
19/04/23 8
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.)
Conference and Plenary Meeting of the PCC in Cyprus
The NG reserves found in EEZ of Cyprus
19/04/23 9
• 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
Conference and Plenary Meeting of the PCC in Cyprus
19/04/23 10
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
Conference and Plenary Meeting of the PCC in Cyprus
19/04/23 11
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
Conference and Plenary Meeting of the PCC in Cyprus
4. The CY Economy and the Property Market
19/04/23 12
Conference and Plenary Meeting of the PCC in Cyprus
19/04/23 13
The CY Economy and the Property Market (cont.)
Conference and Plenary Meeting of the PCC in Cyprus
19/04/23 14
The CY Economy and the Property Market (cont.)
Conference and Plenary Meeting of the PCC in Cyprus
19/04/23 15
The CY Economy and the Property Market (cont.)
60% up
Conference and Plenary Meeting of the PCC in Cyprus
Property Market
19/04/23 16
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
Conference and Plenary Meeting of the PCC in Cyprus
19/04/23 17
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)
Conference and Plenary Meeting of the PCC in Cyprus
Impact of NG on CY Economy (cont.)
19/04/23 18
(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
Conference and Plenary Meeting of the PCC in Cyprus
Impact of NG on CY Economy (Cont.)
19/04/23 19
(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)
Conference and Plenary Meeting of the PCC in Cyprus
Impact of NG on CY Economy (Cont.)
19/04/23 20
(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
Conference and Plenary Meeting of the PCC in Cyprus R & D Statistics
19/04/23 21
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.
Conference and Plenary Meeting of the PCC in Cyprus
5. Impact of N.G on Property Market
19/04/23 22
(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)
Conference and Plenary Meeting of the PCC in Cyprus
Impact of NG on CY Property Market (Cont.)
19/04/23 23
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
Conference and Plenary Meeting of the PCC in Cyprus
19/04/23 24
Impact of NG on CY Property Market (Cont.)
Oil tank investments at Vasiliko by VTTV
Distribution of CY Gas on mainlandEnergy Center
Conference and Plenary Meeting of the PCC in Cyprus
19/04/23 25
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
Conference and Plenary Meeting of the PCC in Cyprus
6. Expected Signs of Recovery - Property Cycles
19/04/23 26
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……..!
!
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