Greek Cyprus receives bids for offshore licenses

Sept. 12, 2007
During 2006-08 Cyprus will have completed its first hydrocarbon prospectivity assessment off its coast to promote exploration, launched two licensing rounds, and granted exploration licenses for the first.

Doris Leblond
OGJ Correspondent

PARIS, Sept. 12 -- During 2006-08 the Republic of Cyprus will have completed its first hydrocarbon prospectivity assessment off its coast to promote exploration, launched two licensing rounds, and granted exploration licenses for the first.

This speedy program was outlined in Paris Sept. 5-6 at the North African Oil & Gas Summit organized by London-based Energy Exchange Ltd. IHS Energy's director for industry relations Andrew Hayman described the exploration strategy of Cyprus as "North Africa's contribution to European security of energy supply."

Cyprus decided to exploit its resources after the northeastern Mediterranean island became part of the European Union in January 2004. "We waited until then because of the national security the EU gives us," said Solon Kassinis, director of energy service at the Cyprus Commerce, Industry, and Tourism Ministry.

The island of Cyprus is divided into two areas: the southern, Greek-populated Republic of Cyprus and the less prosperous, Turkish-populated, Northern Cyprus, which has been controlled by Turkey since 1974, is not internationally recognized, and is not part of the EU. Strong antagonism exists between the Republic and Turkey, which until 2004 prevented any exploration off Cyprus.

A nonexclusive MC2 seismic survey that Norway's Petroleum Geo-Services ASA carried out in early 2006 on 70,000 sq km of the Cyprus Exclusive Economic Zone (EEZ) launched the hydrocarbon assessment program with the acquisition of 6,770 line-km of 2D seismic data. The survey provided high-resolution, subsalt deep imaging and ties to key wells in Shell's North-East Mediterranean (Nemed) deepwater block off Egypt.

The seismic report, together with regional geological background, formed the basis of a geological interpretation carried out in 2006 by France's private petroleum consulting firm Beicip-Franlab, of which Institut Francais du Petrole is the sole shareholder.

Companies interested in participating in the first licensing round off Cyprus purchased this interpretation report, which was made available Feb. 15. The closing date was Aug. 16, with evaluation of applications set for as long as 6 months later.

Eleven offshore blocks totaling 60,000 sq km were offered for licensing. Blocks 3 and 13, which are undergoing a 3D seismic survey, will be available during the second licensing round, which will take place in 2008 following a regional 2D seismic survey in the eastern Mediterranean.

Kassinis said the first round generated three applications: one from Noble Energy Inc. and two from the consortium of Norway's Larsen Oil & Gas AS, the UK's DNO ASA, and the UAE's Dove Energy.

The selected applicants will be offered a production-sharing contract with exploration and exploitation license terms and conditions, and they will be bound by a strategic environmental assessment being carried out to evaluate likely effects of hydrocarbon activities on the environment.

The Republic entered into an agreement with Egypt to develop cross-median line hydrocarbon resources and has entered into international agreements with Lebanon and Egypt to delineate the EEZ. Negotiations with Israel and Syria are under way and should be finalized at yearend.

Summing up E&P consultant Beicip-Franlab's assessment of the Cyprus offshore hydrocarbon prospectivity, senior consultant Lucien Montadert said although the offshore Cyprus was "virgin territory," hydrocarbon discoveries have been made in the vicinity in Egypt, Gaza, and Israel, and source rocks that generated the hydrocarbons have been discovered and could be projected to the offshore Cyprus area.

Montadert also pointed to "encouraging" seismic anomalies and direct hydrocarbon seismic indicators as well as to the evidence of a great variety of play concepts and play fairways based on interpretation of the seismic profiles and regional geological background.

Seventeen major plays have been identified, and the play fairways have considerable size, reaching tens of kilometers, Montadert said, adding that offshore Cyprus is a new 70,000 sq km frontier area with thick sedimentary basins and an extended seal: the Messinian Evaporites. "The existence of active petroleum systems is ensured," he said.