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19 June 2013

Cyprus Hydrocarbons Newsletter № 4

US energy giant Noble Energy has begun appraisal drilling at a second site in offshore Block 12 on the 7th of June.

The government plans to build a liquefied natural gas (LNG) plant at Vassilikos, Limassol, for the processing, domestic distribution and export of offshore natural gas. The government hopes to sign a preliminary agreement with Noble for developing the LNG facility. The deal’s purpose is to set up a joint venture between the state hydrocarbons company and Noble; it would be a special purpose vehicle seeking out investors for the plant. Сonfirmation of the gas estimates at Aphrodite would allow Cyprus to start sounding out long-term buyers for the gas, also paving the way to seeking financing for the LNG terminal. In order for the LNG terminal to be an economically viable project, at least 6 tcf of natural gas would need to exist in Block 12. However all indications show that the reserves will amount to 7 tcf or more.

Given long-standing American support for Israeli interests, and the involvement of US-based Noble Energy in Cyprus’ EEZ, as well as a close reliance on Turkey to ensure its security interests in the region are met, the US is in a good position to play a background role of mediator in the Cyprus-Turkey dispute over natural gas deposits in the Eastern Mediterranean.

The merging of DEFA (Natural Gas Public Company) and the state’s Hydrocarbons Company (KRETYK) is under examination in an effort to modernize the state. DEFA is the island’s natural gas company responsible for the import, storage, distribution, transmission, supply and trading of natural gas and the management of the distribution and supply system of natural gas in Cyprus.

Cyprus needs to invest in education in the field of oil and gas exploitation if it is to become a strong energy centre in the Eastern Mediterranean. Skills and knowledge are very important for Cyprus which attempts to build successful energy sector and become a regional energy hub.

According to a study by the Human Resources Development Authority, it was anticipated that more than 5,000 jobs would be created in the hydrocarbons sector by 2019.

 

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