Cyprus energy director sees promise in East Mediterranean gas development

Drilling offshore Cyprus Block 12 will begin later this month in an effort by Noble Energy Inc. to determine the extent of the natural gas resources, tentatively estimated at 10 tcf.

Block 12 is one of a dozen concessions in Cyprus’ maritime Exclusive Economic Zone, and depending on the results of the pending drilling campaign, Cyprus plans to publish tenders for exploration rights to the other 11 blocks.

In an interview with Israel’s Globes business daily, Cypriot Energy Service director Solon Kassinis discussed upcoming tenders, as well as his country’s natural gas potential and its possible joint ventures with Israel.

“We intend to publish tenders for licenses for 12 blocks and an additional area within Block 12 that covers 25% of its area,” Kassinis said, noting that the area is “partly in the Levant basin, which we share with Israel, and part in the Nile Delta basin, which we share with Egypt.”

Kassinis cited a US Geological Survey estimate that the Levant basin has 122 tcf of natural gas, of which Israeli discoveries total 30 tcf. He also noted that the Nile Delta basin has an estimated 223 tcf of gas, and “we believe that most of it is in the area of our licenses.”

The Cypriot official said he is not optimistic about oil being found in Noble’s Leviathan field but said he is “quite certain that oil will be found in Cypriot waters.”

Kassinis said that these estimates, combined with his country’s “very easy” tax regime, has already brought many oil and gas exploration companies to his office, including companies that have avoided Israel due to concern for the companies’ interests in Arab countries.

"Some of the oil majors have visited us, including Total, Norway’s Statoil, and Chevron. Just 2 weeks ago, I was in Norway and they showed a lot of interest in what we’re planning here,” he said.

In response to a proposal by Yitzhak Tshuva’s Delek Group Ltd. to build natural gas storage and export facilities in Cyprus, Kassinis said that there are “issues” that must be clarified at the state level.

Kassinis said that in his last meeting in Israel, he presented five construction proposals: a pipeline from Leviathan and Block 12 to Cyprus; an LNG facility; a methanol plant; power stations; and oil and gas storage terminals to be used for the strategic reserves of both countries.

Regarding threats by Turkey over drilling off Cyrpus, Kassinis said that they have “no choice but to respect international law” and that he believes the Turks will not “make good on their threats.”

Still, he also held out the possibility of his country operating gas concessions under the military protection of Israel.

"It is not within my professional authority, but I think it is possible to expand cooperation to the military sphere. For example, [Israel] will secure Leviathan with [its] ships and submarines; why shouldn’t [it] also secure Block 12, which is only 33 km away?"

Earlier this month, Lebanon warned the United Nations that Israel’s proposed maritime border threatens peace and security, as the two East Mediterranean nations spar over offshore oil and gas reserves.

It said Israel’s claim “infringes on Lebanon's EEZ” and represents “a clear violation of Lebanon’s rights…and puts international peace and security at risk” (OGJ Online, Sept. 8, 2011).

Last month, Israeli defense officials confirmed media reports that Israel’s defense forces, concerned by threats from Lebanon’s militant Hezbollah organization, have deployed drones or unmanned aircraft to protect the country’s recently discovered offshore oil and gas fields.

“The decision to deploy drones was made in order to maintain a 24-hr presence over the site,” said a report in the Jerusalem Post, later confirmed by an Israeli defense official.

Contact Eric Watkins at hippalus@yahoo.com.

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