Energy Minister Giorgos Lakkotrypis, had to put a positive spin on the disappointing results of the exploration drilling in Block 11 by ENI and Total. After the build-up and the high expectations created, the minister needed to be rather imaginative in announcing that the Onisiphoros gas field was found to contain less than half a trillion cubic feet of natural gas, too small a quantity to make extraction commercially viable.
He looked on the bright side. “The importance of Onisiphoros lies in the fact that it proved that the geological model of Zohr (an Egyptian gas field in which massive quantities of gas were found) does work,” he said on Tuesday. The carbonate formations in the bedrock within the three blocks, awarded in the third licensing round, bore a resemblance to the structure in which the Zohr gas field was discovered, he said.
The “big target” could be in one of the three blocks licensed this year, he speculated, when asked by journalists. Raising hopes has been an integral part of the government’s energy policy, even though Lakkotrypis was quick to remind journalists on Tuesday that he was personally telling the media that, judging by the seismic data, he did “not anticipate a large discovery” in Block 11. Exercising restraint is the best policy, but Lakkotrypis could not resist the temptation to speculate about the “big target”.
Everyone should have learnt by now that gas exploration is a long drawn-out process in which there are no certainties. Even after a discovery is made there is no guarantee the natural gas will be extracted as this depends on costs and the price it would command. Our politicians showed their ignorance of the energy market in the past with some absurd public comments. One claimed we could avoid the bailout by raising funds from pre-selling natural gas we had not found. Another claimed Egypt would sign a purchase agreement for Cypriot gas, not to mention the government’s oft-repeated claim that a liquefaction plant would be set up. This was before it came up with the idea of the East Med pipeline that would supposedly take our gas to Greece.
Nobody really knows what will happen in the energy sector over the next five to ten years. Even if a “big target” was eventually hit, nobody could forecast when the gas would be extracted and sold. Israel made a big discovery years ago and has still to sell any gas. Too many factors outside our control influence decisions in the energy industry and our politicians need to accept this reality and stop building up public expectations.