Cyprus Mail

‘Important news’ expected from Total

The government is poised to grant French energy giant Total an extension on its exploration license in offshore Block 11, local media reported on Wednesday.

In addition, the oil and gas major is said to have identified a target, and could be drilling by next summer or early autumn 2016.

The reports said Total has already formally requested from the government a two-year extension on their contract, which expires in February.

Philelefheros writes that the cabinet could give the green light during its scheduled session this Thursday.

Meanwhile, speaking at a news conference on Wednesday, DISY leader Averof Neophytou said “important news” is expected from Total.

“The eastern Mediterranean holds significant natural gas reserves: the Cyprus EEZ, Egypt, Lebanon and Israel. If jointly exploited, these reserves can substantially contribute to EU’s energy security,” Neophytou said.

“And in my opinion, a solution to the Cyprus problem will help toward the eastern Mediterranean reserves contributing to the EU’s energy security.”

Per the production-sharing contract – the model employed by Cyprus with all license holders in the Exclusive Economic Zone – upon expiry of its initial contract period Total must return to the Republic 25 per cent of the acreage in Block 11. This contractual clause is a form of penalty on companies for not drilling within the initial exploration period.

According to daily Politis, following the acquisition of new geological data, Total have identified the location for drilling an exploratory natural gas well.

The site, the paper said, could be in the northern section of Block 11.

The target lies in carbonate layers in the bedrock, taking the cue from ENI, who back in August discovered a massive natural gas reservoir in carbonate layers within Egyptian waters.

Previously, Total had deployed a different geological model, tracking sand reservoirs. Back in January, the company was all but ready to pull out of Cyprus having failed to identify targets, but was persuaded by the government to keep its operations going.

Total had relinquished Block 10 without drilling any wells. The company was released from its original two-well drilling commitment – across two adjacent blocks, 10 and 11, lying on the maritime border with Egypt – but maintained exploration rights in Block 11, agreeing to continue to evaluate 3D seismic data in a bid to locate a possible target.

At the same time, Phileleftheros said, Total has also requested to have the rights for Block 10 returned. But the energy ministry is expected to seek advice from the Attorney-general on how to proceed legally due to the interest from rival firms to also explore the area.

One stumbling block for Total is what Cypriot port to use for its land-based logistical and support services. The licenses for these support facilities at the port of Larnaca expire in the summer of 2016, and the town’s residents are almost certain to object to an extension. The alternative port of call, the port at Limassol, currently lacks the necessary infrastructure to support Total’s operations.


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