AS HAD been widely expected, the government yesterday announced that it would enter negotiations for block 10 in the Cypriot EEZ with ExxonMobil and Qatar Petroleum consortium. Once ExxonMobil, the world’s largest energy company, had submitted an expression of interest for block 10 there could only have been one winner even though there were two other bids – a joint one by Eni and Total and another by Norwegian firm Statoil.
Having an energy giant like ExxonMobil drilling in the Cypriot EEZ is a very good advertisement for the country in its efforts to be taken seriously as an energy player of the region. We suspect that the government wanted a big and powerful US company drilling in the Cypriot EEZ, because it reasoned that there would be less chance of Turkey resorting to its usual gunboat diplomacy.
More so now it has been announced that the company’s CEO Rex Tillerson will be Secretary of State in the Donald Trump administration. Admittedly, he would cut all links with the company once he takes charge of the State Department, but this has not stopped our government hoping that Cyprus could find support from the US if Turkey resorted to the usual tactics. Then again, nobody is expecting any US favours on the economic front, because the biggest shareholder of the Bank of Cyprus, Wilbur Ross, is set to be appointed commerce secretary in the new administration.
What is interesting is that that the ExxonMobil bid was submitted jointly with state-owned Qatar Petroleum and Qatar is one of Turkey’s closest allies. There is a strong possibility the bid was made in anticipation of a settlement and that neither company would want to carry out exploratory drilling, in defiance of Ankara, if there was no Cyprus deal.
They would not be the only ones waiting for a settlement. A report about the start of drilling of a fifth well in Israel’s Leviathan block, published by the Jerusalem Post on Monday, said among other things, “the Leviathan reservoir partners are continuing to explore their export options, looking potentially to the European market via Turkey and Cyprus.” This prospect is based on the assumption that Cyprus and Turkey would be co-operating in the near future.
We should bear this in mind, because while the third oil and gas licensing round was a resounding success, there is still some way to go before exploratory drilling begins. And it is entirely possible that it would not begin if no deal is reached in Geneva next month.