Cyprus Mail

Gas group to drill at least four wells (updated)

By Elias Hazou
AN ITALIAN-KOREAN consortium with licences in Cypriot offshore blocs plans to drill “at least four” exploratory wells, energy minister Giorgos Lakkotrypis said on Monday.
ENI-KOGAS – which holds concessions on offshore blocs 2, 3 and 9 – informed the government that their exploratory schedule will span 12 to 18 months, beginning likely at the end of this summer.
Lakkotrypis said he and ENI officials discussed the consortium’s plans in more detail. ENI has agreed to bring forward its exploratory operations by a few months, he said.
Their exploratory drilling would last 12 to 18 months, also depending on their finds in the interim, the minister added.
“We have asked flexibility from ENI, so that in the event of a discovery, they would proceed with appraisal drilling of a well sooner, in order that we can find the best possible way of exploiting natural gas as soon as possible,” Lakkotrypis said.
He was speaking to reporters shortly after signing, on behalf of the energy ministry, a cooperation agreement with the University of Cyprus on the promotion of energy-related research programmes.
It’s understood that initial indications are that ENI’s bloc 9 in particular appears to be promising in terms of the gas it may hold.
With regard to US outfit Noble Energy, which holds a concession on bloc 12, the minister said the company plans to drill one more exploratory well, a contractual obligation under the agreement signed with the Republic of Cyprus.
He said the government is still awaiting confirmation for the date, as the US company has yet to complete processing of the seismographic data of the new site they aim to drill.
Previous drills by Houston-based Noble at the ‘Aphrodite’ well have come up with 3.6 to 6 trillion cubic feet (tcf) of natural gas. It’s understood, however, that privately the Americans have narrowed down the quantities to around 3.1 tcf
These quantities on their own are insufficient for operation of an onshore gas liquefaction plant, which in order to be viable requires at least around 5.5 tcf. The government is therefore keen to expedite additional gas discoveries.
On the exploratory programme of French energy giant Total, Lakkotrypis said they intend to begin during the second half of next year.
Total has licences on blocs 10 and 11, which border Egyptian waters of the Nile Delta. Lakkotrypis said it would take longer to process seismic data in the area since no other discoveries have been made there.
The energy minister referred also to ongoing contacts – both face-to-face and via teleconferencing – with officials of Deutsche Bank on the prospect of financing the land-based LNG terminal.
“The preconditions (for financing the project) relate to demonstrating that an LNG terminal is viable, the chief question being the discovery of additional natural gas fields or even the addition of gas from neighbouring countries,” he said.
“This means sufficient quantities of gas, whatever their source, that would make the project viable,” he noted, adding that the LNG project would operate for a period of around 20 years.
Back in April, Deutsche Bank officials told Cyprus they would be interested to lead a financing consortium if the LNG terminal proved to be viable. The German lender would likely take up a role as arranging bank for future financing of the LNG project.
Cyprus has proposed to Israel that the two countries pool their respective gas finds, process them in a facility on the island and export the gas to European markets. But it’s understood that the overtures have not had the desired effect.
Lakkotrypis said the government is holding ongoing contacts with Noble’s Israeli partners in bloc 12, who also happen to be part of the consortium developing Israel’s Leviathan gas field.
Noting that the two consortia are separate entities, the minister said they each would make decisions based on different economic criteria.
The Israeli companies’ priority is to sell gas regionally – to Egypt and the Palestinian territories – via pipeline, he added.
Meanwhile Israeli business news outlet Globes reports that Australian energy exploration company Woodside Petroleum Ltd is in talks to become a partner with Noble and Delek Group in their Cypriot license.
According to Globes, Woodside believes the Cypriot field is suitable for developing a Floating Liquid Natural Gas (FLNG) installation – the same solution it was unsuccessfully attempting to promote as the preferred option for Leviathan.
Woodside pulled out from buying rights in Leviathan earlier this year.
The government here insists that an onshore facility remains its top priority, but given the difficulties it has not ruled out other options, including FLNG.

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