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2014: Hysteria, hype and a few home truths

The Saipem 10000 ultra deepwater drillship

By Elias Hazou

NAVAL blockades, shape-shifting ghost drill ships, gas, then no gas – enough material which Jon Stewart and Stephen Colbert would have a field day with if they were covering Cyprus circa 2014.

This year closed with something of a buzz kill, after news that the “Onasagoras” offshore gas prospect in block 9 came up dry. Perhaps it is just as well – a reality check after the hype surrounding the island’s hydrocarbons adventures and misadventures that simply refuses to go away.

The wackiness started peaking around October, when ENI-KOGAS started drilling in Block 9 and Turkey despatched the Barbaros and warships into the EEZ. The move prompted President Nicos Anastasiades to pull out of peace talks with Turkish Cypriots.

Reports of a Turkish ‘naval blockade’ around the island soon followed, and even though this could not be farther from the truth, the fear-mongering stuck – at least briefly.

As if local media – admittedly not all – needed help, their colleagues in Greece stepped into the fray, with online news outlets there wildly speculating that it was the Turks – roaming in Cypriot waters – who downed a civilian twin-engine airplane. Evidence: zero.

In early November, another ‘crisis’ unfolded: a drilling rig parked off Turkey’s coast was ostensibly heading for the island, apparently confirming that Ankara was making good on threats to drill in Cypriot waters.

Again, the panic was short-lived; it quickly turned out the rig belonged to a Romanian company. It had been working off Iskenderun and was coming here for a maintenance job, assigned to a Cyprus-based outfit. What’s more, the rig in question can only operate in shallow waters, which blew out of the water (sorry) theories that it would be drilling in the seabed hundreds of kilometres off the Cypriot coastline.

On the upside, we did learn that there are companies in Cyprus with the technical know-how to service drilling rigs.

This month, Turkish President Recep Tayyip Erdogan revealed that his country would soon be deploying oil platforms to Cypriot waters. Except that’s not what he said. In fact the Turkish leader was talking about the Black Sea.

But because Erdogan also mentioned that Turkey would press on with its surveys in Cyprus’ EEZ, this was somehow conflated with his earlier drilling remarks. Back home, the frenzy kicked in, with journalists seeking guidance from Foreign Minister Ioannis Kasoulides about the latest Turkish menace.

By comparison to headline-hunting media, officials haven’t fared much better. Until very recently, Energy Minister Giorgos Lakkotrypis and others were still obsessing with a land-based natural gas liquefaction facility, even though this was fast becoming a pipe dream.

Noble Energy knocked the wind out of those sails announcing what everyone – except the government – acknowledged, that is, that the LNG project was a dead duck. At an energy confab in Nicosia in November, the Houston-based outfit said unequivocally that their top priority at this stage is regional pipelines.

Despite this, and with ENI’s drilling in Block 9 in progress, the government held fast to its pet project for an onshore LNG plant.

There was more. The government began talking to British Gas about the prospect of selling gas to the latter’s Egypt operations. Nothing wrong with exploring one’s options, but the way officials here talked up these overtures you’d think it was a done deal. There were just a couple of problems: Israel had beaten us to the punch, having already talked to the Egyptians about gas sales, and then there was the small matter of Cyprus not having enough proven reserves – other than those in Block 12 – with which to negotiate.

December supplied the proverbial anticlimax. On Friday December 19, a glum-looking energy minister announced that ENI-KOGAS had not found enough commercially exploitable natural gas in its first drill at “Onasagoras”.

This was always a possibility and, to be fair, Lakkotrypis had earlier been careful not to whip up expectations from this first well. And the minister was correct in saying that one doesn’t know how much gas there is until you actually drill.

Industry sources have told the Mail that initial seismic data for the “Onasagoras” prospect pointed to potential gas there of the order of magnitude of 5 to 6 trillion cubic feet. Drilling and coming up with nothing is part of the game.

Indeed, despite the “Onasagoras” debacle, the game is not up. Prospecting at other sites could well yield exploitable reserves. And no doubt Cyprus could use a bit of good news. This talk of ‘disappointing results’ was misplaced: disappointment always follows inflated expectations.

A friend told me the other day, “Best that they found no gas, maybe now the Turks will leave us alone.” While we’re not quite on the same page, I can see where she’s coming from.

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