By Elias Hazou
NOBLE Energy has reportedly proposed an alternative and faster method for bringing natural gas onshore from its Block 12 concession for domestic electricity production.
The US energy firm has made an ‘informal proposal’ to the government involving the deployment of a spar platform.
A spar platform can drill and produce natural gas from a well faster than conventional drilling rigs.
Daily Politis, which broke the story, said the US company has proposed using the platform to bring natural gas to the Vassilikos power plant as of January 2016.
The idea floated concerns satisfying Cypriot plans for an interim supply of natural gas.
The Cyprus Mail is told that Noble has come forth now because a spar platform – used until recently in the Gulf of Mexico – has become available.
Noble would be able to purchase the platform at a reduced, second-hand price.
For the project, Noble would lay a pipeline of a smaller diameter (and capacity) than conventional deep-water pipelines adequate to meeting the island’s domestic gas needs.
This is separate to the infrastructures and pipeline that would be laid once Noble and Cyprus conclude an agreement to commercialise gas from Block 12 to Vassilikos for exports.
And according to Politis, Noble’s proposal would see the gas sold at US $12 (€9) per million British Thermal Units (BTU).
There has been no official confirmation of Noble’s proposal. The government is evidently wary of openly acknowledging the offer, lest it be accused of acting in bad faith as it is already in the process of negotiating a bid for the interim supply of gas.
This week, the Natural Gas Public Company (DEFA) is set to hold talks with preferred bidder Itera for the import of natural gas until the island’s own reserves come on tap.
Reports said Itera’s proposal involves bringing the fuel to Cyprus sooner (early 2015), but is by comparison more expensive than Noble’s, at $16 or $17 per million BTU. That’s close to the electricity utility’s current cost of electricity production, estimated to be $18 per million BTU.
It’s understood that Itera plans to deploy a Floating Storage and Regasification Vessel (FSRU).
Although Noble’s offer appears more attractive on the surface, the same reports said, there’s a caveat: the US company wants to use the spar platform for a period of five years in order to get the most out of its investment.
That means the platform would operate from early 2016 to late 2020 – two years later than what Cyprus had in mind for interim gas supplies.
Officials here say Cyprus should be ready to begin exports of its own LNG by 2020 or 2021.
Last week the government and a US-Israeli partnership signed a statement of intent for the development of a natural gas liquefaction plant on the island.
The preliminary accord is seen as a stepping stone 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.
Meanwhile reports say that Australia’s Woodside Petroleum Ltd is considering joining the LNG consortium in Cyprus instead of in Israel.
According to The West Australian, Woodside, which had planned to acquire 30 per cent of the rights to Israel’s Leviathan natural gas field and to build an LNG plant in Israel for the export of gas to the Far East, is reconsidering this plan, after Leviathan partners Delek Group Ltd and Noble Energy signed a memorandum of understanding with the Cypriot government.
The paper said that none of the consortium’s members have the know-how to build an LNG plant, which greatly increases Woodside’s chances of joining it.