"Significant" Interest in Cyprus 3rd Round - Minister Lakkotrypis

Yiorgos Lakkotrypis, the Republic of Cyprus Minister of Energy, Commerce, Industry and Tourism, told an event hosted by Natural Gas Europe in Brussels on May 25 that he sees strong interest from international oil companies (IOCs) in the country's recently launched offshore licensing round. The event was also addressed by the EU's energy union commissioner Maros Sefcovic.

Vice-President of the European Commission, Maros Sefcovic

Eni's discovery of the giant Zohr field offshore Egypt was significant for nearby Cyprus, the minister said. Zohr was based on carbonate structures and ancient reefs, and similar key structures had been identified around the Eratosthenes Seamount in Cyprus's exclusive economic zone.

This had encouraged Cyprus to launch a 3rd licensing round covering Blocks 6, 8 and 10 and Lakkotrypis said there has been "especially significant interest from multinationals". Tenders are due in from interested companies by July 22, with licences to be awarded in early 2017.

"A lot of people have wondered why Cyprus had moved on with the licensing round, especially with current oil and gas market circumstances. Yes, it's true that it had been a dilemna for us." However the minister said that interest has been strong, and strengthened by the discovery of Zohr, and that it was also important to prove the potential of the whole Eastern Mediterranean.

Minister Lakkotrypis and Vice-President Sefcovic

"We have seen that a lot of companies are interested in renewing their portfolio," the minister said, in response to an NGE question relating to recent major cutbacks in capital expenditure and exploration spending by all IOCs. Recently Norway had successfully awarded several blocks in the Barents Sea, he added: "So companies are truly interested in renewing their assets and certainly we hope for the best results."

Cyprus has five Production Sharing Contrcts in effect: block 12 with Nobel, Delek and Shell

(including the Aphrodite discovery); three PSAs (blocks 2, 3 and 9) with Eni and Kogas; and block 11 with Total.

The minister clarified that on May 23 the exploration licence for block 12 expired. "This means that the block, as per the contract is relinquished back to the government, with the exception of the [Aphrodite] discovery". He alluded to press reports that had suggested Noble Energy, Delek and Shell were giving up the rights to Aphrodite too, stressing this was not correct.

"It's the 7-year exploration licence which expires [on block 12] and now the entire licence comes back to the government, with the exception of the discovery which we are now in discussions with the contractors for a development and production plan," said Lakkotrypis.

Officials tell NGE this is standard procedure when the exploration rights are due to expire anyway and when a discovery has been made.

Initial thoughts were that the Aphrodite gas could be monetised through an onshore LNG plant in Cyprus, but the appraisal for the discovery came out a little lower - situating it at about 4.5 trillion ft3 -- than had been expected. "Now what we are looking at is monetising the gas through Egypt which has a lot of needs, with part of it for domestic consumption in Cyprus." He later added that some gas exported to Egypt could be exported as LNG, from existing liquefaction plants there.

Cyprus: A Key Player in the Eastern Mediterranean - Hosted by Natural Gas Europe

Lakkotrypis cited the "good news from Israel" on May 22 that there will now be an agreement on developing Leviathan between the government there and the field's licensees, as he said there could be synergies between that development and the one at Aphrodite.

Mark Smedley