Parliament on Tuesday began reviewing proposed changes to the law that would enable the government to extend the licences for companies exploring for hydrocarbons in the island’s economic waters.
As the law stands, licensed energy companies are granted an initial three years to complete their exploratory programme; this may be extended twice by the government, each time by two years, for a total maximum of seven years.
Now, a bill tabled by the government would give the cabinet discretionary powers to extend the overall period beyond seven years, provided the concession holder files a substantiated request two months prior to expiry.
Extensions to be granted in this way relate either to the initial three-year period or to either of the two additional two-year periods.
The bill, which amends the Hydrocarbons (Prospection, Exploration and Exploitation) Regulations of 2007 to 2014, has been submitted to the relevant House committee.
Andreas Kyprianou, chair of the House energy committee, said MPs are currently reviewing the item on a fast-track basis, per the government’s request, so that it goes to the plenum for a vote as soon as possible.
“We want the companies to continue their drilling programme, despite any problems which may arise while they conduct their work,” Kyprianou said.
The matter also has a political aspect to it, he added.
The new bill was approved by the cabinet on June 18 of this year. The proposed changes concern only the exploration part of licensed hydrocarbons activities.
The Hydrocarbons Law and Regulations currently envisage the granting of authorisations for prospection, exploration and exploitation activities.
Authorisations for prospection are valid for up to one year. They do not permit drilling but allow evaluation of hydrocarbon potential.
Authorisations for exploration are initially valid for three years and allow the holder to undertake gravity, magnetic and seismic surveys and exploratory drilling. They are renewable for two further periods of two years.
On each renewal, 25 per cent of the initial surface of the area included in the authorisation has to be relinquished.
In the event of a discovery, the concession holder has the right to be granted an exploitation authorisation for the discovery.
Lastly, authorizations for exploitation are granted for an initial period of up to 25 years with the option of one renewal of up to 10 years.
Applicants granted such an authorisation must enter into an exploration and production-sharing contract with the state.
In February 2018, Turkish naval forces prevented a drillship leased by Italy’s ENI from reaching its target in Cyprus’ offshore Block 3. The standoff lasted two weeks before the drillship retreated.