World Bulletin / News Desk

The Greek Cypriot administration's Energy Minister Yiorgos Lakkotrypis has announced that permission has been granted to a joint bid by Eni/KOGAS to begin exploratory drilling for natural gas in block 9 of the island`s Exclusive Economic Zone (EEZ).

Naming the field of exploration “Onasagoras,” the Energy Minister said that indications of a possible natural gas resource find are very promising after a meeting between Greek Cypriot officials and JV Eni/KOGAS representatives.

Greek Cypriot daily Parikiaki reported that the two sides had met to discuss and investigate areas of cooperation related to potential gas resources valorization, with priority to the onshore LNG option.

In a statement, Lakkotrypis, said: “The MoU signed today is an agreement 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.“

Italian energy giants Eni and KOGAS already operate blocks 2 and 3, and by adding block 9 to their field of exploration they will control a total of three of the twelve blocks in the the Cyprus EEZ, with Eni having an 80% participating interest in the three blocks compared to KOGAS's 20%.

Drilling is expected to commence as soon as the drill arrives from a mission in Mozambique, with the Energy Minister promising the process to start before the end of summer.

The Greek Cypriot government have already sealed deals with French energy firm TOTAL for blocks 10 and 11, while drilling by US firm Noble Energy in Block 12, otherwise known as the Aphrodite Field, have revealed estimated gross mean resources of 5 trillion cubic feet (tcf).

LIQUIFICATION PLANT

Greek Cypriot Energy Minister Yiorgos Lakkotrypis's insistence on an LNG plant on the island of Cyprus comes after Michael Leigh, a senior adviser at the German Marshall Fund of the United States, said that a proposed pipeline that would channel gas reserves to Europe from the eastern Mediterranean via Turkey was in doubt due to practical reasons.

Unresolved questions over pricing, the long term risks regarding the involvement of private firms, and the mutual benefits of the project could pose potential barriers, Leigh told told Monitor Global Outlook. Leigh also claimed that Turkey's incentive to build the pipeline comes across as weak, as Turkey would only “marginally” gain in its effort to diversify energy imports due to limited quantity.

Although the likely consumer is Europe, which would require pipelines to pass through Turkey, firms operating in the region may decide instead to export the gas to Jordan for domestic consumption, just as Noble and Delek Group had agreed to export $500 million worth of gas to Jordan from Israel's Tamar field over 15 years in February.

On the other hand, exports may go to Egypt, which hosts the only Liquified Natural Gas (LNG) plant in the region. Once liquified, exports may be transported to the Asian continent, as Egypt cannot supply its own demand for natural gas with LNG due to its lack of a regasification plant.

Israel has considered plans to begin building an LNG plant in Cyprus in 2016 in order to allow Israel to supply the Asian demand for a cheap price. However, Australia, Mozambique, the US, Canada and Russia have already offered to supply the far-east with LNG by 2018-2020, so the Greek Cypriot administration has to work quickly to establish its own plant by then.