UPDATE 1-Cyprus, energy companies to sign LNG project MOU June 26

Fri Jun 21, 2013 9:27am EDT

NICOSIA, June 21 (Reuters) - Cyprus will sign a Memorandum of Understanding (MOU) with Noble Energy, Delek Drilling and Avner Oil Exploration on June 26 regarding the development of a liquefied natural gas (LNG) terminal, authorities said on Friday.

Cyprus, which discovered natural gas off its shores in 2011, aims to begin LNG exports in 2020, processing not only its own gas but also supplies from Israel and potentially Lebanon.

Cyprus needs to restructure its economy as a condition of a recent bailout and is looking to the gas discoveries to cut fuel imports, generate revenues and boost industry.

The proposed LNG terminal, which consultants estimate could cost $6 billion, is to be located at the southern coastal industrial site of Vassilikos, the government said in a statement.

The project would be the biggest single investment in the island's history.

Partners Noble, Avner and Delek have discovered some of the world's largest gas reserves off Israel in the past decade, as well as the discovery off Cyprus in 2011. Further exploration work is currently under way off the Mediterranean island.

The U.S. Geological Survey estimates 122 trillion cubic feet (3.5 trillion cubic metres) of recoverable gas lies in the eastern Mediterranean sea basin, much of it beneath the seabed between Cyprus, Israel and Lebanon.

Some gas from the East Mediterranean is expected to head to Europe, but its proximity to the Suez Canal also means super-cooled LNG could reach Asian customers, including top LNG buyers South Korea and Japan.

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