Cyprus Mail
Business Energy

Coronavirus: Scheduled gas drills likely to be delayed

Foreign Minister Nicos Christodoulides

Scheduled gas drills offshore Cyprus will most likely be delayed for an indeterminate amount of time, Foreign Minister Nicos Christodoulides said on Tuesday, when asked about the fallout from the coronavirus situation.

Speaking to the Alpha television channel, Christodoulides said the planned well in Block 6 by the ENI-Total consortium would “no doubt be affected.”

He added: “Current conditions around the world will undoubtedly impact these developments. The most likely scenario is that the drilling will be postponed, because under the present circumstances it is not feasible for the projects to be carried out as planned.”

ENI and Total had planned to carry out exploratory drilling at a site dubbed Kronos in block 6.

Prior to the coronavirus outbreak, work had been due to start in early February, but was delayed owing to technical issues faced by the drillship, the Tungsten Explorer, while it was operating in Egyptian waters.

The rig is currently drilling in Lebanese waters, where it’s expected to finish sometime in late April. After that, it had been scheduled to come to Cyprus.

But that is highly improbable now, energy analyst Charles Ellinas tells the Cyprus Mail.

“Only if ENI and Total have already leased the rig – which isn’t clear – might they possibly decide to go ahead. But even then, there would be the logistics involved in bringing a crew over to the drillship amid the current coronavirus-related restrictions.”

He said the companies could cite force majeure (due to coronavirus) as a way of getting out of their contract with the company owning the rig.

This year was going to be extremely busy, with between seven to nine wells planned in Cypriot waters.

In addition to Kronos, ENI had been planning an appraisal drill in block 6, ExxonMobil an appraisal well in block 10, and Noble Energy also an appraisal well at Aphrodite in block 12.

None of these companies have explicitly stated they are postponing or abandoning their projects in Cyprus. But realistically, says Ellinas, putting these projects on the backburner is a given.

Without specifically referring to Cyprus, ENI recently announced it is reviewing its planned activities in 2020 and 2021, as well as all its energy projects in the Middle East, with the aim of reducing capital expenditures.

“With these cutbacks, it makes sense they would continue only their ongoing, core operations – and Cyprus is not a priority,” the analyst said.

Ellinas predicts that the “double whammy” of coronavirus and sliding oil prices will probably push exploration projects back by two or even three years as companies struggle to get back on their feet.

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