The Minister of Energy, Commerce, Industry and Tourism, Mr. Yiorgos Lakkotrypis announced to Natural Gas Europe the signing of a Memorandum of Understanding at the Ministry between the Republic of Cyprus and the ENI/ KOGAS consortium to explore ways of exploiting the potential gas reserves in the Cyprus Exclusive Economic Zone (EEZ), with priority given on the land Liquefaction Terminal.

Lakkotrypis added that the signing confirms the commitment of the Government to promote the land terminal as the optimal solution for the exploitation of potential deposits of the Republic of Cyprus, provided, of course, that more natural gas quantities will be found. The minister also said that the MOU between the Republic of Cyprus and the ENI/KOGAS consortium constitutes the completion of a cycle of agreements between the Cypriot government and the licensees of the Blocks- Noble and Total. ENI has an 80% interest in Blocks 2, 3 and 9 and KOGAS has a 20% interest.

The Minister also revealed, in the same statement, the names of six new potential reserves in Blocks 2, 3 and 9. They are Onasagoras, Zenonas, Kinyras, Amathusa, Evagoras and Praxandros. The first four potential reserves have already been approved for drilling, while the others are being processed and expected to be approved very soon.

The planned LNG terminal in Vassilikos remains Cyprus’ strategic goal. An LNG terminal will give Cyprus the flexibility to reach lucrative markets (including Asia) and allow the island to realise its energy hub ambition, attracting natural gas from neighbouring countries for processing and shipping. The ENI/KOGAS consortium plans to commence exploration activities as early as August 2014 in Block 9 of Cyprus' EEZ. Total, which holds licences for blocks 10 and 11 will begin the search for the hydrocarbon in Cyprus’ EEZ in 2015. Lakkotrypis said that the first results revealed by ENI/KOGAS at the end of the year will be the first step towards determining the commercial viability of Cyprus' planned LNG terminal.

Noble has already encountered substantial amounts of natural gas in the Aphrodite field discovered in 2011 and located in Block 12 of Cyprus’ EEZ. The field has a gross mean average of 5 Tcf. According to energy experts, and based on current LNG prices, Cyprus needs as much as 12 Tcf to afford a two-train LNG terminal. Noble Energy will also be conducting further exploratory drilling in Block 12.

Cyprus’ neighbours have also launched exploration efforts of their own. Israel has made large discoveries with its Leviathan and Tamar fields estimated at 21 and 10 Tcf respectively. Israel is now in the process of laying out an export strategy. The country has announced it is considering exporting its gas via Egypt’s export terminals. Lebanon’s waters are also believed to contain large amounts of natural gas but the country has been struggling to launch its first licensing round, delayed by domestic political rivalries.

Cyprus’ completion of its planned LNG terminal would have a significant impact on its economy. The final investment decision will highly depend on the success of the major oil and gas companies involved off the island’s shores.