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The government of Cyprus has decided to begin negotiations with storage terminal operator Vopak Oil EMEA BV regarding the construction of a petroleum delivery and storage facility at Vasiliko, local sources report.

Speaking after a Council of Ministers meeting, government spokesperson Stephanos Stephanou is quoted as saying that the project was of great importance for the country's economy and would promote Cyprus as a transit commercial centre.

Stephanou is also said to have commented that the terminal would solve the storage issue for petroleum reserves, as well as the issue of keeping strategic reserves. In 2009, KODAP - a government-owned company set up to manage oil reserves - was reported to have 612,300 tonnes of fuel stored in the Netherlands, Greece and Cyprus.

Stephanou said that once negotiations with Vopak were completed, the Minister of Commerce, Industry and Tourism would take the issue back to the Council of Ministers for a final decision.

"We are now in the final stretch of the creation of a petroleum delivery and storage terminal," he said, adding that a team has been appointed to carry out the negotiations.

Vopak won the tender for the Vasiliko terminal ahead of rival firms VTTI BV, Puma Energy Holdings BV, Stolthaven Terminals BV and a joint venture consisting of DOR Chemicals Ltd., Eilat Ashkelon Pipeline Co. and Eilat Ashkelon Infrastructure Services Ltd.

VTTI Terminal

Meanwhile, terminal operator Vitol Tank Terminals International (VTTI), is scheduled to complete construction of its 643,000-cubic metre (cbm) oil terminal complex in Vasiliko, Cyprus by the end of 2014.

VTTI announced plans in July 2010 to build a major oil import and distribution terminal in the industrial area of Vasiliko, Cyprus. Construction work began on the island in early 2011. VTT Vasiliko Ltd. (VTTV) is the Cyprus-registered company that is in charge of the terminal development project.

The new facility will be a storage terminal for fuel oil, gasoline, diesel and jet fuel, gasoil and MTBE. Phase one of the project will create 20 tanks and a capacity of 357,000 cbm. Phase two will create 14 tanks and a capacity of 286,000 cbm. The total cost of the project is estimated at €200-€300 million ($258-$387 million).

VTTI estimates that it will serve some 550 ships per year when the Vasiliko terminal is fully operational. It is building a four-berth 1.2 km long jetty capable of loading or discharging 1,250 cbm per hour.

VTTI is a leading player in the storage and terminal business - a 50/50 joint venture between Vitol Group, one of the world’s largest energy traders and MISC, the major Malaysian shipping company.

Image: VTTI Vasiliko, Cyprus