FRENCH oil giant Total appears set to abandon plans to drill in blocs 10 and 11 and close down its Cyprus operations. Its surveys have failed to identify geological structures with positive prospects of oil or gas and the company has decided against drilling which was scheduled in the first half of this year. Prospects have presumably been deemed so poor that the company has decided to cut its losses and get out, despite having paid in excess of €40 million for the rights to the two blocs.
This was a very disappointing development for Cyprus after last month’s news that the ENI-KOGAS exploratory drilling in the Onasagoras plot in bloc 9 had yielded negative results. The Italian-Korean consortium is now drilling in another plot in the same bloc and if the results are again disappointing, it is entirely possible that it would also suspend its operations.
This is the nature of the oil and gas business which spends vast amounts of money on drilling without any certainty that it would produce positive results. It may take several exploratory drillings before hydrocarbons are found in substantial quantities, but because these are very costly operations companies are not inclined to keep on drilling indefinitely.
The government had reportedly been informed about Total’s plan to pull out several months ago and had been trying to convince it to stay. A country with aspirations of becoming a regional energy centre cannot have a big oil company closing its operations without even conducting exploratory drilling. As Cypriot politicians would say, this would send out the wrong message.
Then again, the government has only itself to blame for playing up the hydrocarbons issue before significant quantities had been found. The president kept telling us that a liquefaction plant would be built, despite the fact that natural gas quantities would not justify such a costly project, while the commerce minister announced that agreements for selling natural gas to Egypt would be signed and talked about selling natural gas to Jordan. Not only did they unjustifiably build up public expectations, but also exposed a big degree of amateurishness to prospective partners.
It is to be hoped that the government will draw the right lessons from the latest disappointment and, at long last, start to exercise restraint when it talks about hydrocarbons and energy policy. Even if it has grand energy plans for the country, it should keep them under wraps until adequate hydrocarbons are found to justify them.