Cyprus Mail
Cyprus

Government touts for gas giants’ business

Starting this week, President Nicos Anastasiades and Energy Minister Giorgos Lakkotrypis will hold a round of meetings with energy companies in a bid to promote the third oil and gas licensing round.

July 22 is the deadline for expressions of interest in the third licensing round. The acreage opened up for bidding are Blocks 6, 8 and 10 in the island’s Exclusive Economic Zone (EEZ).

Speaking to the public broadcaster, Lakkotrypis said he was headed to London, where this Wednesday he will be seeing representatives of energy companies. Later in the week he will fly on to Houston, Texas for similar meetings.

Media are speculating that the companies which have so far expressed an interest – without this meaning that they will submit offers – include ‘new and old players’ in the Cypriot EEZ.

French giants Total and Italy’s ENI are said to have requested updated geological data. An unnamed Russian energy outfit has reportedly done the same.

Total currently has an exploration licence on Block 11. ENI has licences on Blocks 2, 3, and 9.

The ‘prize’ appears to be Block 10, which lies near the border of Egypt’s EEZ and in close proximity to the massive Zohr find.

Neighbouring Israel has also been busy. According to Israeli news outlet Globes, the country’s Ministry of National Infrastructures, Energy and Water Resources is set to publish 60 new oil and gas licences, ending four years in which the country’s economic waters have been closed for offshore energy exploration.

Globes also reported that Shaul Meridor, the director general of the ministry, is holding a round of meetings in New York with potential investors in Israel’s natural gas market.

Among other things, Meridor has been talking about a prospective Israel-Turkey gas pipeline. The Israeli official said that Turkey’s relative proximity to Israel meant the pipeline “could be swiftly laid”.

The Israel-Turkey pipeline appears to be back in play after the two nations signed a reconciliation agreement last week ending six years of frosty relations following the 2010 Mava Marmara Gaza flotilla incident.

The mooted pipeline must necessarily pass through Cypriot waters.  Nicosia has repeatedly stated it is opposed to an Israel-Turkey pipeline running through its EEZ until a comprehensive settlement of the Cyprus problem.

But as an energy analyst previously told the Cyprus Mail, whereas Tel Aviv would prefer to have Nicosia’s consent for the pipeline, it does not need it.

Cyprus and Turkey are members of the Energy Charter Treaty, where EEZs are not considered sovereign territory, therefore the owner of an EEZ cannot stop a project from going ahead.

Commenting on this on Monday, Lakkotrypis suggested Cyprus was not worried about the stance of its ally, Israel.

“Our relations with Israel have deepened. In official channels, the Israel to Turkey pipeline has not been discussed at length,” he told CyBC.

But earlier, Globes had quoted an unnamed Cypriot energy executive who was said to be “furious” with the prospect of Israel now pushing the pipeline project.

A Globes expose from last October claimed that Israel was demanding that Cyprus include it in its development of the Aphrodite prospect because some of the reservoir spills over into Israel’s Yishai reservoir. Israel meanwhile was said to be refusing to sign a unitisation agreement with Cyprus, which would officially regulate the development of their shared oil and gas reservoirs – delaying the development of the Cypriot field.

According to Globes, Israel could offer a “barter deal” where Israel “releases” the Aphrodite reservoir in return for the authorisation for its Turkish pipeline. In such a deal, Cyprus could also connect to the pipeline and export gas to both Turkey and Europe.

Meantime Lakkotrypis revealed that the government was submitting on Monday its observations on the revised development plan for Aphrodite submitted to it by the consortium holding the licence.

A period of deliberations will follow, the minister said, so that the government and the consortium can reach agreement regarding the when’s and how’s of developing the reservoir.

Lakkotrypis conceded that no buyers have yet been lined up for the Aphrodite gas, attributing this to low oil and gas prices which are discouraging investment.

The minister said also that Total would be ready to begin exploratory drilling in their Block 11 acreage in early 2017.

On the relocation of Total’s onshore logistics base from Larnaca to Limassol port, Lakkotrypis said this has been agreed.

Back in February, Larnaca’s municipal council voted against granting a six-month extension to the base’s operation at the town’s port, forcing the government to seek an alternative location for Total.

 

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