Our View: Things are looking up for Cyprus energy, but that could change

When Noble Energy made its first discovery in the Aphrodite field in 2011 there was rejoicing and expectations, encouraged by politicians, that Cyprus would be selling natural gas a few years later. In 2013, when the economy was in meltdown, politicians even proposed selling Aphrodite to raise much-needed funds for our cash-strapped state. It was a laughable suggestion that came to nothing apart from exposing the general ignorance of how the oil and gas industry operates.

The time frames that oil companies follow are not the same as for other businesses because of the vast amounts of money that have to be invested before any oil and gas is extracted and sold. Speaking on state radio on Tuesday morning, Energy Minister Natasa Pilides explained that she expected Chevron, which now has the licence for the Aphrodite field, to start marketing gas in 2026 or 2027, which is still four years away. It was expected to carry out additional drilling in the meantime. From discovery to exploitation of gas reserves would have taken a minimum of 15 years assuming the 2026 forecast is correct.

World market conditions are now favourable for the exploitation of Cyprus’ natural gas – the world price is very high and EU countries are determined to stop buying from Russia, which is considered an unreliable partner. There will be demand for natural gas from alternative sources. The more finds there are, the more viable extraction becomes, because this would create synergies and make investment in infrastructure viable, said Pilides. This is why more drilling and seismological studies were being carried out by oil companies. ENI, which announced a find of 2.5 trillion cubic feet in Block 6, will carry out more drilling as will Chevron in Block 12 and ExxonMobil and Qatar Energy in Block 10, which boast the biggest quantities of between 5 and 8 trillion cubic feet.

Conditions are now favourable for the exploitation of Cyprus’ natural gas and Pilides said the government would intensify consultations with the EU for Cyprus to be included in the Union’s future energy plans. Of course, it will take time, as the minister was quick to point out, but at least now there are medium-term prospects for Cyprus gas. There is also the Turkey factor, which will not go away, to consider, and the government would do well to work out how it will deal with it, sooner rather than later.

Things are looking up for Cyprus energy at present, but we should bear in mind that the current, favourable conditions could change.