The Zohr Field May Be Cypriot, Too

The Zohr discovery announced by Italy’s ENI earlier this month does not only mean a great deal for Egypt itself, but is likely to reshape the whole region’s dynamics. The field, located in Egypt’s maritime zone and believed to hold as much as 30 Trillion Cubic Feet (Tcf) of natural gas, is expected to solve Egypt’s energy crisis as the country undergoes severe energy shortfalls and suffers from spiking energy bills due to LNG imports. The discovery raised fears that potential deals to import Israeli and Cypriot gas may be off the agenda if Egypt no longer needs gas from neighbouring countries when it can develop its own. Egypt’s Minister of Energy Sherif Ismail assured his Israeli and Cypriot counterparts that Egypt will still need to import gas from Israel’s Leviathan and Tamar, and Cyprus’ Aphrodite as the Zohr field is not expected to come online before 2020. But it is yet to be seen if the LNG terminals at Idku and Damietta will have enough capacity to process gas from the Zohr field as well as the gas from neighbouring Cyprus and Israel imported to Egypt via undersea pipelines.

The Zohr field is however not necessarily a threat for Cyprus’ export ambitions. ENI’s newly discovered reservoir is in fact located only 6 kilometers away from Block 11 of Cyprus’ EEZ, licensed to France's Total. The Cypriot government announced on Tuesday through its Minister of Energy Yiorgos Lakkotrypis that it is currently investigating if the Zohr field extends into Cyprus’ EEZ. ENI had previously declared that the field extends to 100 square kilometers but it is not yet clear whether it is a shared field between Cyprus and Egypt. It is expected that the Cypriot government will make an announcement to confirm or deny such a possibility in the next few days. Should the Zohr field indeed extend into Cypriot waters, it is believed that the Cypriot and Egyptian governments will work closely towards jointly developing the reservoir. ENI already has a presence in Cyprus as it is licensed to drill in Blocks 2, 3 and 9 of Cyprus’ EEZ and has commenced exploration activities in Block 9. ENI's established relationship with both the Cypriot and Egyptian governments that should facilitate the communication between the two. Furthermore, Cyprus and Egypt enjoy friendly diplomatic relations and have an agreement for joint exploitation of borderline gas fields.

Cyprus’ only discovery to date, the Aphrodite field estimated at 4.54 Tcf and discovered by Noble Energy, is not large enough to justify the commercial viability of multi-billion dollar export infrastructures. The Cypriot government has been exploring the possibility of exporting gas to Egypt for liquefaction and export via Egypt’s underused export LNG terminals. If Zohr proves to be Cypriot as well as Egyptian, a close collaboration between the governments of Egypt and Cyprus that will bring the island closer to achieving its gas dreams, is to be expected. In the meantime, all eyes are on the Cypriot government as we await further information on the exact habitat of the Zohr discovery.

Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat