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Cyprus

Gas exploration moves to exploitation

Elliott and Lakkotrypis at the palace

Cyprus is on the verge of moving from natural gas exploration to exploitation, Minister of Energy Giorgos Lakkotrypis said on Tuesday.
Four years after the initial exploration well in block 12 in Cyprus’ EEZ, US Noble Energy will shortly submit a development plan for the commercialisation of the 4.50 trillion cubic feet reserve of natural gas found in the Aphrodite well, declaring it commercially viable.
“Cyprus is at a turning point as for the first time we are progressing from exploration to exploitation,” Lakkotrypis said, addressing the Eastern Mediterranean Gas Conference that began in Nicosia on Tuesday. “Cyprus today is indeed progressing towards the monetisation of its natural resources,” he added.
Earlier in the day he was present in a meeting between President Anastasiades and Noble, after which the company’s Vice President for the Eastern Mediterranean Keith Elliot said it plans to declare the commerciality of the Aphrodite field and to submit the reserve’s production plan in a few weeks.
Elliot said Noble was “bringing the Aphrodite discovery to the next phase of exploitation, it’s something that we have been looking forward to for some time now and it is a tremendous opportunity that we hope will bring prosperity to both the people of Cyprus and the government of Cyprus, as well as the other countries in the region.”
“I cannot emphasise strongly enough the significance of this development,” Lakkotrypis said.
Noble’s Vice President for communications and government relations Ben Dillon said that Aphrodite is the third most significant discovery following Israel’s Leviathan and Tamar fields, also operated by Noble, adding it has the potential to supply Cyprus’ domestic market and meet the strong regional demand.
Due to the size of the Aphrodite play, which holds proven reserves of between 3.6 to 6 trillion cubic feet (tcf), it’s understood that a pipeline is the likeliest development option.
Dillon reiterated his company intends to commercialise the Aphrodite gas both through exports as well as supplies to Cyprus for domestic electricity generation.
Under the agreement with Noble, Cyprus is part-owner of any gas discovered.
Dillion went on to say that “Noble remains committed” to the eastern Mediterranean despite difficulties encountered with Israeli authorities over tax and anti-trust issues.
So far Noble has discovered 40tcf of gas in the eastern Med, the bulk of which is in Israeli fields.
Meanwhile, the ENI-KOGAS consortium will also announce “soon” the results of their exploratory drilling at the offshore Amathusa prospect, Lakkotrypis said.
A previous drill by ENI-KOGAS in another prospect, Onasagoras, did not find enough gas.
On Total, which has concessions on offshore blocks 10 and 11, Lakkotrypis said the company would continue with geological and geochemical surveys.
An updated bilateral agreement between the French energy giant and the government would be signed shortly, the minister said.
Back in January, the government announced that Total could abandon a search for oil and gas off Cyprus after failing to find tangible evidence of reserves. The government was nevertheless keen to keep the company’s Cyprus operations going.
After the disappointing results, the government is now focusing on the Aphrodite prospect in Block 12, operated by Noble Energy.
Minister of Finance Harris Georgiades said that the revenue stream generated by natural gas complements but does not substitute the efforts to consolidate and reform the economy.
After signing a €10 billion bailout in 2013 to avert the collapse of its banking sector and cover its fiscal needs, the government has embarked on a fiscal consolidation and reform programme agreed with its lenders, namely the European Commission, the ECB and the IMF collectively called the Troika.
Energy policy has been elevated to a major government policy, Georgiades told the conference, noting that gas reserves are very important for the local economy and the region, as well.
“We strongly believe that a reformed economy with sound public finances and sound competitiveness can absorb future revenue,” he said.
Energy “is a complement and not a substitute to the effort to put our house in order,” he added.
Lakkotrypis said Cyprus’ energy strategy is focused on three main pillars: attracting investment in the entire value chain of the oil and gas industry; ensuring revenues from the sale contracts related to hydrocarbons; and creating a knowledge-based oil and gas sector, making use of the “human talent available in Cyprus”.

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