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Noble: we’re not going anywhere

By Elias Hazou

NOBLE Energy yesterday reiterated its resolve to monetising Cypriot gas, at the same time denying reports that it has been discussing piping natural gas to Turkey from its Block 12 prospect.

“Rumours that the company is withdrawing from Cyprus are untrue and unsubstantiated. We are working diligently to fully appraise the natural gas resources of Block 12 and to commercialize those resources for the benefit of the people of Cyprus,” Noble said in a written statement.

It was a rare move by the Texas-based company, which is usually not garrulous with the media.

“Regarding the reports on the interview with Matthew Bryza, Noble Energy has not held any conversations with any Turkish entities regarding natural gas from Block 12 going to Turkey,” Noble also said.

The energy outfit was responding to an earlier report carried by Turkish Cypriot daily Havadis. The paper had quoted Matthew Bryza, former US diplomat who is currently member of TURCAS Oil, as saying that Noble is in discussions with his company and with Turkish Zorlu Group regarding the pipeline project for exporting Israeli and Cypriot natural gas to Europe.

In an exclusive interview with Havadis, Bryza said that Turkish regulator BOTAS also took part in the discussions.

Bryza reiterated that the energy resources around Cyprus can motivate a solution on the island.

“If you examine the area, the policies in the area, the relations of Israel with the Arab countries and natural gas export costs, the most reasonable method is building a pipeline from Israel, or more correctly, from Israel and Cyprus to Turkey,” he said.

Publicly, the government here has ruled out a pipeline solution via Turkey for exporting Cypriot gas finds unless the island’s decades-long conflict is resolved first. But progress in ongoing peace talks could conceivably impact that standpoint.

Nicosia has repeatedly affirmed its commitment to building a land-based liquefaction facility for natural gas, as it envisions the island turning into an energy hub for East Mediterranean gas.

So far Noble’s gas finds in its Block 12 concession are far lower than what’s required for a Liquefied Natural Gas (LNG) plant. Reserves of at least 5.5 trillion cubic feet (tcf) are necessary to render viable an onshore LNG terminal.

The ‘Aphrodite’ field in Block 12 holds anywhere from 3.6 to 6 tcf of natural gas, at a 50 per cent probability. At a 90 per cent probability – the industry benchmark to initiate resource development – the reserves would likely drop to 3.1 tcf.

Noble plans to drill another well in Block 12 later this year; and prospecting in other offshore concessions by ENI and Total could raise the reserves making an LNG plant possible.

The government has meantime made some noises about exploring floating LNG as an alternative.

Late last year Noble unveiled their development plans for their East Med gas finds. The first phase of development would see Noble and their partners supply Israel, the Palestinian Authority and Jordan. The second phase is floating LNG, and the third phase is regional supply agreements – with Turkey, Egypt and Cyprus being potential destinations.

Noble and its partners in Israeli concessions are expected to reach a decision on the second phase of development – using floating LNG – by the end of the year.

If they do opt for FLNG for the Leviathan field, that could provide Noble with an added incentive to apply the same technology in Cyprus as well, said Charles Ellinas, former head of the Cyprus National Hydrocarbons Company.

Hypothetically, were Noble to place an order with Korean shipyards to build an FLNG vessel for the Leviathan prospect, they could benefit from a discount if they also ordered a second such vessel for the Aphrodite field.

Despite being an advocate for an onshore LNG plant, Ellinas said that if for whatever reason the venture does not pan out Cyprus should definitely start looking into the floating solution.

The world’s first floating liquefied natural gas facility, Prelude FLNG, is currently being built by Shell off Australia’s northwest coast.

The upside of FLNG, said Ellinas, is that it can be deployed for relatively smaller quantities of gas – such as in Cyprus, for the time being. Another plus is the lower cost – and faster construction time – compared to land-based LNG.

However the disadvantage of FLNG lies in that the vessels are built for specific capacities. Were Noble to commit to FLNG for Aphrodite, that might backfire were they to later discover additional gas elsewhere in Block 12. And deploying more than one FLNG vessel in a single gas prospect is unlikely.

By contrast, onshore LNG offers more flexibility as the facility can be upgraded to accommodate more gas.

 

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