Total to Drill Offshore Cyprus in 2015
Total is expected to commence its exploration activities off Cyprus’ coast in mid 2015 once all preliminary work is completed. Total owns exploration licences in blocks 10 and 11 of Cyprus’ EEZ. Successful natural gas encounters by the French giant will increase the island’s chances of bringing its onshore LNG project to fruition. An LNG plant in the Vasiliko coastal site of the island would allow Cyprus the flexibility to reach out for potential customers. The project is currently pending additional gas discoveries in Cypriot waters.
Noble Energy announced the first discovery off Cyprus’ coast in late 2011. The discovered Aphrodite field is located 34 kilometres (21 mi) west of Israel's Leviathan gas field in Block 12 of Cyprus’ EEZ. The field was believed to hold enough natural gas to justify the commercial viability of the multi-billion dollar project. However, an official announcement by Noble in October 2013 following its appraisal drilling results revealed a downsized range of natural gas volumes of 3.6 trillion cubic feet (tcf) to 6 tcf with a gross mean of 5 tcf.
Potential customers for Cyprus include a Europe that is very keen to diversify its energy portfolio- even more so now amid the current Ukraine crisis. Asian customers are also of interest given that gas sells at higher prices in the Asian market. Successful gas encounters would allow Cyprus to realise its LNG ambition in its Vasiliko coastal site.
Israel’s participation in Cyprus’ LNG terminal is uncertain as Israel seems to be still considering all options: a pipeline to Europe, its own LNG or FLNG and/or participating in Cyprus’ onshore LNG project. Israel has also signed gas export deals with its immediate neighbors - including the Palestinian Authority and Jordan given the technical facility of the endeavor and the need for natural gas in its surrounding.
Cyprus' energy ambitions will depend on the results of the further exploratory activities off its shores and on Israel’s export strategy that will soon be revealed. The Eastern Mediterranean has tremendous potential to constitute an additional supply for Europe keen to loosen Russia’s grip. The Eastern Mediterranean must first resolve its various geopolitical conflicts that constitute significant hurdles to exporting the gas.
The most important geopolitical obstacles are the Israeli-Lebanese maritime border conflict and the problem of the division of Cyprus. All attempts to achieve a compromise have failed in the past. Whether the gas factor will this time alter the equation yet remains to be seen.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat