Cove Backs Out of Cyprus Consortium

A deal between Cove Energy and Cairn Energy to jointly explore for oil and gas in Cyprus will no longer go ahead following the backing out of Cove Energy earlier this month.

In a statement yesterday, Cove said Cairn had agreed that Cove could be released from an agreement made in August of last year. Through this agreement, Cairn and Cove had agreed to create a consortium to drill for oil and gas in the Levant Basin in the Eastern Mediterranean Sea, as well as in Lebanon. 

"Cove has informed Cairn that it will not be proceeding with these opportunities and the parties have agreed that Cove is to be released from the obligations of the consortium with effect from 1 May 2012," the company said yesterday.

No reason was given for the decision. However, the company said it was pursuing other opportunities and would make an announcement on these when it was appropriate.

Cairn Energy continues to strengthen its interests in Cyprus, however, with a bid entered in the second licensing round in the country. Last week, the company said it had joined forces with Marathon Oil, CC Energy and Oranje-Nassau Energie to bid for a permit to explore for gas in the country.

Cairn has a 40 per cent stake in that consortium with Marathon holding another 40 per cent stake. CC Energy and Oranje-Nassau Energie each hold a 10 per cent stake.