12 August 2013

Cyprus Hydrocarbons, Newsletter No. 5

During the month of June Cypriot government intensified its efforts of the exploitation of island’s hydrocarbons resources which is currently one of priorities due to the economic situation given. Finding investors for the construction of a multibillion LNG plant is also very important since the exploration of natural gas is considered a cornerstone of the process of recovery of the islands economy. The investment of several billion euro, mainly from the companies involved, and the creation of thousands of jobs over the next two to three years will be able to push the economy back on the road to recovery.

House President Yiannakis Omirou and a parliamentary delegation arrived in Moscow in early July for a two-day official visit at the invitation of the Chairman of the State Duma Sergey Naryshkin. Omirou said the Cypriot delegation was asked to provide information on the ongoing procedures regarding natural gas in Cyprus’ exclusive economic zone and the construction of a liquefaction plant for the export of natural gas. He added that senior officials of Russian energy companies were also present, confirming Russian interest in participating in the burgeoning natural gas industry in Cyprus.

Archbishop Chrysostomos II who has visited Moscow recently, stated that potential investors from Russia had expressed their desire to visit the island with a view to investing in tourism and energy, “and many other sectors”.

Meanwhile the head of the Cyprus National Hydrocarbons Company Charles Ellinas claimed that French energy major Total is interested in buying rights in Block 12 from US Company Noble Energy and its Israeli partners and will probably acquire a 30 per cent stake in the prospect. Total already holds licenses for Blocks 10 and 11. Noble Energy is conducting an appraisal drill off the island to verify 2011 finds of a reservoir containing 5 to 8 trillion cubic feet of gas. Italian energy company ENI will start exploratory drilling for natural gas off Cyprus in the second half of 2014. Noble’s concession areas lies just south of the area that ENI plans to explore next year.

Israeli Energy Minister Silvan Shalom visited Cyprus in early August and met Energy Minister Giorogs Lakkotrypis and Greece’s Energy Minister Evangelos Livieratos to discuss natural gas and energy within Cyprus’ Exclusive Economic Zone (EEZ). The US Geological Survey has estimated that the Levant Basin, which lies largely in Cypriot and Israeli waters, holds around 3.5 trillion cubic metres of recoverable gas.

Cyprus is in the meantime looking to import limited quantities of natural gas for the short term until its own reserves come on tap. An interim gas solution will be able to substantially reduce the price of electricity for domestic use. The government will make a decision within the first half of August about importing interim supplies of natural gas in its attempts to reduce the cost of electricity.


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