By Elias Hazou
CYPRUS and a US-Israeli partnership will next week be signing a statement of intent for the development of a natural gas liquefaction plant on the island, it was revealed yesterday.
Charles Ellinas, head of the Cyprus National Hydrocarbons Company, said the signing ceremony would take place on Wednesday at Nicosia’s Filoxenia hotel.
The parties are the Cyprus state, Noble Energy International, and Israel’s Delek Drilling and Avner Oil Exploration Limited Partnership.
It is hoped the preliminary accord leads to a final agreement in the future setting up a joint venture between the parties – a special-purpose vehicle seeking investors for the estimated €7 to €8bn LNG plant.
Earlier this month, Noble started appraisal drilling in its Block 12 concession off the southern coast to ascertain whether there is enough untapped gas to make the venture commercially viable.
Based on initial test drilling in 2011, the estimated amount of gas in Block 12 is 5-8 trillion cubic feet, with a mean of seven trillion cubic feet, the Houston-based company said.
Noble owns 70 per cent of the drilling project, with Israeli partners Delek and Avner each holding 15 per cent.
Officials here say a final investment decision by Noble to develop the gas could be taken in 2016.
Ellinas reiterated yesterday that the estimated gas reserves in Block 12 are sufficient to make an LNG plant viable, but reiterated that Cyprus would welcome Israeli and possibly Lebanese gas being processed at the facility at Vasilikos.
On Sunday the Israeli cabinet is expected to approve a decision on its own hydrocarbon finds. Israel will be keeping 60 per cent of its natural gas reserves for domestic use and permit the export of the remaining 40 per cent.
Israel’s gas reserves are expected to total 900 billion cubic meters (BCM), meaning the country Israel will retain some 540 BCM for domestic use and leave 360 BCM for exports.
Ellinas said this quantity would be enough for Israel to steer its exports into two directions, one being to Turkey via a pipeline, the other sending its gas to Cyprus for processing into LNG.
He was speaking at the 2nd Cyprus Natural Gas Conference, a two-day event in Nicosia organised by IMH.
Due to Israeli security concerns over its gas infrastructures, it would be wise for the Middle Eastern nation to diversify its export routes, said Amit Mor, a leading independent energy consultant.
Thus part of the exported gas from the Tamar field might be diverted via pipeline to Turkey and the rest to Cyprus and then shipped onto European or Asian markets, he said.
Debt-stricken Cyprus is counting on its gas resources to pull it back from the brink, although actual revenues from gas sales would come no earlier than 2020.