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Halliburton ‘vote of confidence’ in Cyprus (updated)

By Stefanos Evripidou

OILFIELD services giant Halliburton on Friday concluded a deal with the government to use Cyprus as their base of operations for the eastern Mediterranean, providing a much-needed “vote of confidence” for the prospects of the Cypriot economy.

The Cyprus Mail reported last week that two of the world’s largest oilfield services companies- Halliburton and Schlumberger- were about to sign relevant agreements with the government this month to set up shop in Cyprus.

Halliburton’s Senior Vice President for Europe and Africa Mark Richard met on Friday night with President Nicos Anastasiades at the Presidential Palace to close the deal.

Once the meeting ended, Energy Minister Giorgos Lakkotrypis wasted no time spreading the news on Twitter, welcoming Halliburton to Cyprus in a tweet. He wished them the best in servicing hydrocarbons exploration in Cyprus’ Exclusive Economic Zone (EEZ) and thanked them for their confidence in Cyprus’ potential.

Speaking after the meeting, Richard said: “It is a pleasure to be here in Cyprus for the start of our operations to support our customers and the country of Cyprus in the ongoing efforts to hopefully produce oil and gas here in the Mediterranean.”

The Halliburton official thanked the government “for the tremendous support and hospitality in helping us to get started here in the country”, adding, “Hopefully, this is the start of many, many good years to come”.

Richard said the multinational will base its operations in Larnaca. Halliburton currently operates in more than 80 countries.

Asked how many people will be employed in Cyprus by the company, Richard said: “That depends on how much work we actually win from competitive tenders with our customers, but it will be considerable at one point in time.”

Halliburton is expected to announce shortly its plans for collaboration with Cyprus-based companies and universities, as part of its operational plans for the region.

The giant’s operations are due to start in Larnaca before summer’s end.

Lakkotrypis, also present last night, beamed at having the “great pleasure” to receive “such an important company” that will be active in providing support services for hydrocarbon explorations within Cyprus’ EEZ.

“The presence of such a company constitutes a vote of confidence for Cyprus and the prospects of the Cypriot economy,something which we very much need,” said the minister.

Talks with the company began many months ago with the involvement of the president himself, he said. They reached a “happy conclusion” last night, opening the way forward for the company’s establishment in Cyprus, a move which will help achieve economic growth in the short-term, said Lakkotrypis.

The minister said he hoped to have something similar to announce soon, a likely reference to the pending agreement with Schlumberger, expected to be sealed before the end of the May.

Schlumberger, arguably the world’s largest oilfield services company, has its principal offices located in Houston, Paris, and The Hague. In the industry, they are known as sub-surface specialists, and develop a lot of the software used to analyse seismic data.

Last week, former executive chairman of the Cyprus National Hydrocarbons Company, Charles Ellinas, confirmed to the Mail that the two multinationals were about to set up shop here.

He said Halliburton in particular have been looking to rent land for their base of operations in the Aradippou/Larnaca area, close to the Larnaca harbour and the airport.

Halliburton provides drilling services and gear for companies prospecting for hydrocarbons.

Their base in Cyprus will cover the entire eastern Mediterranean, which is expected to become a hotbed of exploration activity in the years to come.

According to Ellinas, Halliburton estimates around 50 to 60 new wells will be drilled in the eastern Mediterranean (Israel, Cyprus and Lebanon) in the next few years, possibly racking up $5bn to $7bn in drilling costs. Halliburton will be keen to get a significant slice of that pie, and Cyprus’ political stability makes it a sensible place from which to base its pie-chasing operations.

Halliburton’s activities here would likely consist of storing their drilling gear and opening up offices.

Ellinas noted that once the company secured contracts for its services, local companies would have an opportunity to provide support services like storage space, servicing of equipment, providing supplies etc.

Considering Halliburton’s modus operandi elsewhere, the US-based company is expected to set up a management team but then hire and train locals to do the work.

Speaking yesterday at an oil and gas conference in Nicosia, Finance Minister Harris Georgiades on Friday highlighted the huge importance of hydrocarbons to Cyprus’ economic prospects, warning however that: “The discovery of hydrocarbons does not mean we have won the lottery – like some people in Cyprus are saying.”

The energy sector is promising but also a challenge, which requires careful handling and a well-prepared strategy, he said.

“We are not and should not be basing our financial recovery on natural gas prospects alone. It should be based on facts and not on political rhetoric.”

Georgiades noted that the finance ministry would submit a legal bill before the end of the year to set up a national fund to handle hydrocarbons revenues in a transparent manner for both current and future generations.

Peace, stability and regional cooperation as a result of hydrocarbons could also see a solution to the Cyprus problem, said the minister, noting it was an opportunity to see the normalisation of relations with neighbours – especially Turkey.

Also addressing the conference, DIKO leader Nicolas Papadopoulos warned that without a Cyprus problem solution, the government needs to stick to plans to build a liquefaction plant to export gas from the eastern Mediterranean basin to Europe and Asia.

“It should be clear that, with the solution of the Cyprus problem pending and before the necessary confidence towards Turkey is built, Cyprus cannot consider any ideas for exporting its natural gas via pipelines to Turkey,” said Papadopoulos.

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