Cyprus Mail

Time out for Noble talks is denied

Discussions between the government and Noble have not been frozen according to Stelios Chimonas, a member of discussion team

By Elias Hazou

OFFICIALS yesterday denied that Noble Energy, operators of the Block 12 offshore licence, has reportedly asked for a ‘time-out’ in talks on a mooted gas liquefaction terminal here.

Citing its sources, daily Politis said the Texas-based company proposed a break in the negotiations until January to give Cyprus time to make up its mind regarding various aspects of the LNG project.

Stelios Chimonas, permanent secretary of the energy ministry and a member of the government-appointed team conducting talks with Noble, told the Cyprus Mail that Noble has not called for a freeze in discussions.

“There is no such issue… talks are progressing normally,” he added.

But the official did concede that negotiations aimed at hammering out an LNG project agreement – initially earmarked for the end of this year – might drag into early 2014.

He declined to comment further; the talks are bound by a confidentiality agreement.

Meetings between Noble and the government have been fairly regular since they began in August, the last get-together taking place last week. Sources told the Cyprus Mail the next meeting has not been scheduled yet.

“The government evidently needs to reflect on certain things, but it doesn’t indicate either a collapse or a protracted postponement in the talks,” said the sources, who did not wish to be named.

The media reports come in the wake of comments made last week by energy minister Giorgos Lakkotrypis, who told the House Watchdog Committee that the government had some ‘tough decisions’ to make over the next fortnight or so.

And at the same committee meeting, the Auditor-general – whose office participates in the Cypriot negotiating team as an observer – had spoken of apparent delays in the talks.

According to Politis, a key consideration has to do with the state’s participation as a stakeholder in the LNG terminal.

It was previously thought the government preferred for the Cypriot state to hold a controlling interest in the joint venture that would be set up for the project.

But in a report prepared recently for the government, Gas Strategies, a London-based consultancy, recommended that the LNG terminal remain in private hands.

The consultants, who approached the matter purely from an investment angle, highlighted the difficulties for the debt-ridden state in raising or securing financing for the multi-billion euro project.
It’s understood that their findings gave the administration some pause.

In the event the government should eventually opt not to own a controlling stake in the LNG project – or stay out completely – the state would still raise revenues from natural gas sales. The agreements with Noble and other energy firms stipulate that a significant percentage of the gas belongs to the state. However, in this scenario the government loses control over strategic decisions – like export markets for the gas.

Industry analysts now place the earliest date for possible exports of LNG at 2021, whereas officials had originally spoken of 2018 or 2019. Bailed-out Cyprus is counting on hydrocarbons investment and revenues to take it out of deep recession.

Meanwhile Israeli news site Globes reports a delay in the drilling of the well to the oil-bearing strata of the Leviathan gas field. The drilling at the Israeli field – where Noble is also a partner – was supposed to begin in December.

Globes said continued regulatory uncertainty regarding development of the field, plus an ongoing anti-trust probe in Israel, was postponing the final investment decision by the Leviathan partners. A spokesman for Noble in Israel however denied there were any hold-ups.

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