Cyprus is heavily dependent on oil imports which account for 92% of
total primary energy supply (TPES). The Ministry of Commerce, Industry
and Tourism (MCI&T) is the state authority that monitors the oil products
market. Nevertheless, the Council of Ministers may grant authorisations
for the prospecting exploration and exploitation of hydrocarbons, following
a tender or auction. The aforementioned law does not explicit differentiate
between foreign and Cypriot investors. Two multinational companies (BP-Mobil
and Esso) and a consortium of Cypriot companies (Petrolina, Lina and Lefkarities
Oil) import crude oil as well as finished products, whilst the Electricity
Authority of Cyprus (EAC), which generates and delivers electricity throughout
the island, imports heavy fuel oil.
Cyprus Oil Refinery Ltd.(CPRL), the only refinery in Cyprus, has been in operation since 1972, following ratification of Law 42/1969 - an Agreement between the Republic of Cyprus and certain oil companies to establish a refinery in Cyprus. The refinery is a share-holding company whose stakes are allocated as follows; Government (65%), Mobil Oil Cyprus Ltd. (25%) and Petrolina Ltd (15%). According to the said Law, the refinery has to treat all oil marketing companies operating in Cyprus equally, whether or not they participate in the aforementioned Agreement. The refinery accepts crude oil from oil companies and delivers finished products back to them in return for a processing fee. Oil products, produced at the local refinery, may be exported in case of surplus only. Oil companies are free to import crude oil at any time for further processing at the refinery. With the exception of heavy fuel oil for the Electricity Authority of Cyprus, the marketing companies distribute all oil products. The Cyprus refinery applies hydroskimming technology and its maximum
capacity is 1.2 millions of MT of crude oil per year. CPRL satisfies about
55% of total refined products demand in Cyprus. The MCI&T examines
all import applications for petroleum products in order to ensure that
the local refinery is fully utilised. Oil products are imported by the
oil marketing companies (75% of total imports), the Electricity Authority
of Cyprus (23%) and the two cement plants (2%). The implementation of environmental
protection measures and the production of gas oil with a low sulfur content
require considerable investment (US$ 39 million). In 1998, CPRL began producing
unleaded petrol. Strategic reserves of crude oil and finished products
are not maintained in Cyprus.
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