Cyprus Mail
Cyprus Energy

Next six to 12 months critical for Cyprus hydrocarbons industry

Toula Onoufriou outlining gas prospects on Tuesday

By Angelos Anastasiou
NEGOTIATIONS between state hydrocarbons agency EYK and Noble-Avner over the prospect of channelling natural gas from Israel’s Leviathan reserve to Cyprus to secure the viability of constructing a liquefaction terminal in Vassilikos are in good shape, the agency said on Tuesday.
Addressing a news conference on Tuesday, EYK board member Lenas Mylonas said the results of Italian-Korean consortium ENI’s planned drilling are also crucial to developing the industry in Cyprus. He said the agency is currently focusing on both these issues.
“We have made significant progress in the last three meetings with Noble-Anver,” he said. “We are working on the Government Agreement, which is the contract that will fund the start of the project.”
According to Mylonas, the consortium has already agreed to funnel 20 per cent of the Leviathan field to Egypt, but there are more reserves that the consortium may decide to commit to the Cyprus terminal at any moment, and negotiations on this are very close to the end.
EYK chairwoman Toula Onoufriou said all the oil companies in Cyprus are being kept informed of negotiation developments, and noted that apart from the Israel gas the option of moving ahead with the liquefaction terminal with Cyprus’ reserves, which are hopefully enough to sustain it, is still there.
Onoufriou deemed the coming six to 12 months “critical” to the future of Cyprus in the hydrocarbons’ industry, referring to ENI’s drilling programme, which starts in September and provides for four drillings.
“There will be important developments and more concrete data that will enable us to make important decisions,” she said. “At the same time we will be monitoring international developments, which are variable.”
Mylonas said the interest shown by Total and ENI is very encouraging, and that both have invested in Cyprus waters.
He added that Noble is planning an additional drilling, currently mulling over whether it will be confirmatory or exploratory, and that the bilateral agreement between Cyprus and Israel to share drilling data is important in terms of enriching each country’s database.
EYK’s board pointed out that high expectations should not be cultivated in an inherently risk-laden process.
“The search for hydrocarbons is a dynamic project, and things change according to the progress of the search,” board member Constantinos Nicolaou explained. “The industries and companies have their own logic.”
According to Nicolaou, the investment for constructing the liquefaction terminal may reach half the country’s budget in a very difficult period.
“It will not be an investment for the sake of investing, but to make things easier,” he said.
But even if the terminal’s construction falls through, there are various options depending on the quantities discovered. Board member Mike Efthymiou said possible alternatives may include exporting gas to Egypt or utilising offshore liquefaction plants.
“Our priority is to construct the terminal, but upon discovering more reserves combining onshore and offshore plants may be a suitable option,” he said.
Asked whether Cyprus could tap the Far East markets, which are considered the most profitable, board member Theodoros Tsakkiris said the best way to move in this direction would be to “include Asian customers in the consortiums.” He added there are preliminary talks with important Asian companies.
With regard to investments in Cyprus, Onoufriou said that although there is international interest in financing the onshore liquefaction plant, the key factor is the quantities of gas found.
“When we have confirmed reserves, the mechanisms to secure funding will be set in motion,” he said.
He added that international hydrocarbons-related service companies have expressed interest in launching operations in Cyprus, citing the example of Halliburton, which has offered four TEPAK graduates two-year international training internships.
According to Onoufriou, EYK will be announcing a vacancy for the position of General Manager shortly, and recruit a number of people with specialised international experience.
“EYK also plans to attract younger people with a strong academic background, who can survive an intense programme of continuous training,” she said.

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