NICOSIA, May 30 (Reuters) - The European Investment Bank, the financing arm of the EU, said on Thursday it would consider investing in an LNG terminal which Cyprus plans to construct in coming years to tap natural gas in the east Mediterranean.
Discovery of the resource off Cyprus could help to ease a grim economic outlook after authorities had to close one bank and seize savings in a second in return for 10 billion euros in aid from the European Union and International Monetary Fund in March.
Authorities have said they will go ahead with the construction of a liquefied natural gas plant on the southern coast, hoping to process Cypriot gas, and also potentially gas discoveries from neighbouring states like Israel and Lebanon with exports from around 2020.
“If that is the decision of Cypriot colleagues and friends then we would be open, to have the necessary due diligence from the banking point of view and from the technical point of view,” EIB President Werner Hoyer told journalists.
Hoyer, in Nicosia to sign a 100 million euro investment loan to Cyprus, was responding to a question on whether the EIB would contemplate an investment in the plant.
The EIB has also been actively involved in funding the introduction of technology to the island allowing a future switch from now fuel-fired generators to those running on natural gas.
At present heavily reliant on expensive heavy fuel for energy generation, Cypriot consumers have among the highest electricity bills in the EU, second only to Denmark.
Consultants estimate the first phase of the LNG facility, including infrastructure and one delivery chain, will cost $6 billion. Authorities are looking at different financing options, including possibly using LNG sales agreements as collateral for loans.
U.S. energy firm Noble plans to launch an appraisal drilling off Cyprus in June in connection with a previously discovered reserve it estimated as holding between 5 and 8 trillion cubic feet (tcf) of gas. Two other firms, France’s Total and Italy’s ENI, plan drillings off Cyprus by 2015.
The U.S. Geological Survey estimates a mean 122 trillion cubic feet (3.5 trillion cubic metres) of recoverable gas lie in the eastern Mediterranean basin, as well as 1.7 billion barrels of recoverable oil. Much of it lies beneath the sea bed between Cyprus, Israel and Lebanon. (Reporting By Michele Kambas)