Friday, May 23, 2014

Biden: Cyprus May Become Global Natural-Gas Hub | Associated Press

NICOSIA, Cyprus May 22, 2014 (AP)

U.S. Vice President Joe Biden on Thursday underscored Cyprus' potential to become a key provider of natural gas to Europe, saying that newly discovered offshore reserves of the fossil fuel represented a unique opportunity for the divided island nation.
"Cyprus is poised to become a key player ... transforming the eastern Mediterranean into a new global hub for natural gas," Biden said as he toasted his host, Cyprus President Nicos Anastasiades, at lunch in the presidential palace.

Anastasiades said the gas deposits, which also have been found in Israeli waters, can offer "an alternative energy corridor leading to increased energy security."
The West wants to develop alternative suppliers of natural gas for Europe. Russia, the current top supplier, has threatened it could cut supplies or raise prices to European customers as part of diplomatic rifts over Ukraine.

Biden pledged U.S. government support for efforts to reunify the island. In 1974, Turkey invaded after a coup by supporters of union with Greece. For the past four decades the island has remained divided into a breakaway Turkish Cypriot north and an internationally recognized Greek Cypriot south.
Turkey, which doesn't recognize Cyprus' sovereignty, has voiced strong opposition to Greek Cypriot claims to the natural gas fields. It has repeatedly sent warship-escorted research vessels into Cypriot waters, where oil and gas companies are currently surveying, to underscore their own claim.

Only Turkey recognizes a 1983 Turkish Cypriot declaration of independence and maintains 35,000 troops in the north.

Turkish Cypriot leader Dervis Eroglu, who met separately with Biden, said afterward that Turkish Cypriots are entitled to the potential mineral bounty and asserted that "the world accepts that."

Anastasiades said he had "no doubt" that strong U.S. support would help secure Cyprus' rights to exploit its natural resources over Turkish objections.

Biden later dined together with Anastasiades and Eroglu at a restaurant inside the United Nations-controlled buffer zone dividing the capital, Nicosia. He said both leaders had agreed to speed up renewed peace negotiations.

Analysts say Israel, which already has developed natural gas fields in its waters, may want to utilize Cyprus as a terminus for future pipelines as its own industry expands in the eastern Mediterranean.
A reunified Cyprus would make it easier for Israeli and Cypriot gas exports to reach Europe through Turkey.


Link to source: http://abcnews.go.com/International/wireStory/biden-cyprus-turn-region-global-gas-hub-23823473

Greece Rekindles Search For Oil And Gas But Political Hurdles Remain | Forbes

5/22/2014 @ 9:17πμ 353 views
As much of the Eastern Mediterranean searches for ways to capitalize on the region’s new-found energy potential, Greece moved to kick-start its dormant energy exploration effort last week with the approval of three exploration licenses, each awarded to consortiums led by domestic firms.

Without Woodside, the Leviathan partners have a weaker hand with Turkey and Egypt | Globes

Leviathan partners plump for pipeline option

Amiram Barkat

Without Woodside, the Leviathan partners have a weaker hand with Turkey and Egypt.


Analysts and Tel Aviv Stock Exchange (TASE) investors were indifferent to the announcement by Australia's Woodside Petroleum Ltd. (ASX: WPL) that it had pulled out of the Leviathan deal. The share prices of Leviathan partners Delek Group Ltd. (TASE: DLEKG) and its energy units Avner Oil and Gas LP (TASE: AVNR.L), and Ratio Oil Exploration (1992) LP (TASE:RATI.L) all fell in response to the cancellation of the farm-out deal. It can be assumed that had this announcement come a year ago, the impact on the shares would have been devastating.

Cancellation of the Woodside deal finds Delek with pretty good alternatives for the sale of natural gas and with enough capital to finance its share of Leviathan's development, due to the successful bond issue early this month and the sale of non-gas assets. The condition of Ratio, which owns 15% of Leviathan, is far less certain.

"We're continuing as usual," said Noble Energy chairman and CEO Charles Davidson, but the repercussions of the cancellation could be severe and painful, even if Leviathan's development goes ahead as planned in the short term. The gas field's marketing risks have shot up. The chances of closing a long-term gas supply contract in Asia at high prices have plummeted without the abilities and customers that Woodside would have brought to a deal.


Without the Woodside option, the Leviathan partners have a weaker hand in negotiations with customers and governments in Turkey and Egypt. It is enough for one more channel to fall apart to undermine confidence in Leviathan's development model. For the Israeli market, this is not just a blow to its image caused by the walkout of a foreign investor, but it is also the loss of the only company that could replace Noble Energy. It seems that Israel's total dependence on Noble Energy will only deepen.

The cancellation was no surprise given discord over the deal lately, topped by Woodside CEO Peter Coleman's theatrical walkout from the signing ceremony at the Sherover Promenade in Jerusalem.

A brief reminder: Delek controlling shareholder Yitzhak Tshuva and his partners brought Woodside to Israel in the belief that they lacked the capabilities to develop Leviathan on their own. They sought an energy major to inject capital and expertise and to bring Far Eastern customers who were prepared to pay top dollar for Israeli gas. Two years ago, everyone was talking about the need to build a huge liquefied natural gas (LNG) plant. The Tzemach Committee on gas exports recommendations were tailored to the size of this plant, which is now irrelevant.

In retrospect, it seems that the seeds of separation were sowed when the memorandum of understanding was signed in December 2012. Tshuva and his Israeli partners at Ratio were not pleased by the deal that Woodside offered, and it seems that the deal was forced on them by their American partner. This dissatisfaction was translated into the creation of an alternative market for Leviathan's gas.

Contacts with large customers in Turkey, Egypt, and Jordan were originally intended to assist in the effort to secure from Woodside a better deal. But this effort, handled by Delek Drilling CEO Yossi Abu, was so successful that Tshuva fell in love with the new option and set aside the dream of selling LNG to China and Japan. The turnaround was completed when Noble Energy also came on board and announced that the sale of gas via pipeline to regional markets was its preferred option.

Personal relations also contributed the failure of the deal. Delek executives' refusal to meet Woodside representatives for six months deeply insulted the Australians. Tshuva felt their response in his exchange with Coleman on the balcony of the King David Hotel in Jerusalem. Coleman told Tshuva to stay out of his business, and left the partners in Leviathan in the lurch.

Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014



Link to source: http://www.globes.co.il/en/article-leviathan-partners-plump-for-pipeline-option-1000940423

Thursday, May 22, 2014

Noble Energy Announces Termination of Leviathan MoU With Woodside | Noble Energy

May 20, 2014

Noble Energy Announces Termination of Leviathan MoU With Woodside


HOUSTON, May 20, 2014 /PRNewswire/ -- Noble Energy, Inc. (NYSE: NBL) today announced that the parties have agreed to terminate the non-binding memorandum of understanding regarding the sale of interest in the Leviathan licenses, offshore Israel, to Woodside Petroleum.  Following termination of the agreement, working interests in the Leviathan Project remain as follows: Noble Energy as operator (39.66 percent), Delek Drilling (22.67 percent), Avner Oil Exploration (22.67 percent), and Ratio Oil Exploration (15 percent).

Charles D. Davidson, Noble Energy's Chairman and CEO, commented, "The plans for development of the Leviathan discovery have significantly changed since we began the search for a partner approximately two years ago.  Perhaps the most dramatic changes have been associated with the growth in the regional markets.  The emergence of these regional markets, which are accessible through pipeline outlet, has pushed the need for LNG into a later phase of development versus our earlier plans.  While we have not been able to reach a mutually acceptable agreement with Woodside, we continue to move forward with our partners and the Israel government with plans to develop this world-class asset for the benefit of all stakeholders."

Significant progress has been made on the development of the Leviathan field, following approval of Israel's natural gas export policy, an agreement with Israel's Anti-trust Authority, and receipt of the Development and Production Leases for Leviathan.  Noble Energy is targeting to sanction the initial phase of development at Leviathan by the end of 2014, with first production from the field currently planned for late 2017.

The initial development phase is planned to be a 1.6 billion cubic feet per day floating, production, storage and offloading (FPSO) system, to provide natural gas into Israel and surrounding regional markets.  Front-end engineering and design studies are ongoing for the second phase of development at Leviathan, which is anticipated to be a floating, liquefied natural gas (FLNG) production system.

The Leviathan Project is located offshore Israel in approximately 5,550 feet of water.  It has an estimated 19 trillion cubic feet of discovered natural gas resources.

Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production.  The Company has core operations onshore in the U.S., primarily in the DJ Basin and Marcellus Shale, in the deepwater Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa.  Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL.  Further information is available at www.nobleenergyinc.com.

This news release contains certain "forward-looking statements" within the meaning of federal securities law.  Words such as "anticipates," "believes," "expects," "intends,"  "will," "should," "may," and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect Noble Energy' s current views about future events. They include estimates of oil and natural gas reserves and resources, estimates of future production, assumptions regarding future oil and natural gas pricing, planned drilling activity, future results of operations, projected cash flow and liquidity, business strategy and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this news release will occur as projected, and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, without limitation, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other actions, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy's business that are discussed in its most recent annual report on Form 10-K and in other reports on file with the Securities and Exchange Commission. These reports are also available from Noble Energy's offices or website,
http://www.nobleenergyinc.com. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Energy does not assume any obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

The Securities and Exchange Commission requires oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The SEC permits the optional disclosure of probable and possible reserves, however, we have not disclosed the Company's probable and possible reserves in our filings with the SEC. We use certain terms in this news release, such as "discovered natural gas resources," which are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our most recent annual report on Form 10-K and in other reports on file with the SEC, available from Noble Energy's offices or website,

http://www.nobleenergyinc.com
.  
SOURCE Noble Energy



Link to source: http://investors.nobleenergyinc.com//releasedetail.cfm?ReleaseID=849242

Woodside drops Leviathan, but small FLNG may still happen | Interfax

Woodside drops Leviathan, but small FLNG may still happen

By Leigh Elston and Sara Stefanini
Posted 21 May 2014 14:14 GMT
A Noble Energy and Transocean rig in the Tamar field offshore Israel. (Transocean) A Noble Energy and Transocean rig in the Tamar field offshore Israel. (Transocean)
After 18 months of negotiations, Woodside has finally abandoned a $2.7 billion deal to take a 25% stake in the Leviathan gas field, saying it was not commercially viable.

“All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal,” Woodside Chief Executive Peter Coleman said on Wednesday.

Woodside had been waiting for further clarity on Israel’s gas export tax before signing off on the farm-in. The Australian LNG player was said to be disappointed by the severity of the tax, having calculated the profitability of its Leviathan investment based on far lower taxation, Interfax understands.

The Perth-based company’s share price on the Australian stock exchange dropped immediately after the news was announced, but quickly bounced back and closed slightly higher than the day before.

However, some argue the growth in regional gas demand in the East Mediterranean had weakened the strategic case for bringing in an Australian LNG player with a customer base in East Asia.

The surge in interest in Israeli gas from private companies in Turkey, Egypt and Jordan over the past year “has pushed the need for LNG into a later phase of development versus our earlier plans”, Charles Davidson, chief executive and chairman of Noble Energy – operator of the Leviathan field – said on Wednesday.

Still, Woodside may yet join a slimmed down FLNG-led second phase of the Leviathan development. “We might have a smaller-scale joint project together with Woodside for FLNG for which we will allocate, say, 4 trillion cubic feet [113 billion cubic metres] of gas,” one partner close to the project told Interfax. “But for now we will continue full steam ahead with promoting pipeline exports of gas to neighbouring countries and domestic market.”

The project partners have an option to revive the non-binding letter of intent signed with the Levant LNG Marketing Corp. – a joint venture of Daewoo Shipbuilding and Marine Engineering, NextDecade and D&H Solutions – and the Tamar partners to build a 3 mtpa FLNG facility offshore Israel.


Tamar transfer


While the agreement was initially for the Tamar field, it would not be a problem to transfer it to Leviathan, a source told Interfax. Gazprom Marketing & Trading signed a heads of agreement with the JV early in 2013 to market the full 3 mtpa of LNG from the facility for 20 years.

“It is imperative the Leviathan partners develop the FLNG export scheme along with pipeline projects – and Woodside could have contributed a lot in terms of bringing in LNG clients, technology and financing,” said Amit Mor, chief executive of Israel-based financial consulting firm Eco Energy.

“Although the pipeline projects to Turkey, Egyptian liquefaction projects and Jordan are the most economically viable and strategically important, they are still prospective and are facing geopolitical challenges,” Mor said.

Even the strong financial support Woodside would have brought to Leviathan – which has an upstream cost estimated at $5 billion – became increasingly unnecessary over the course of negotiations. A $2 billion bond offering by Delek Group units Delek Drilling and Avner Oil in May was more than five times oversubscribed, demonstrating international investors’ financial appetite for the Leviathan project.

Cash flow from the Tamar gas field, which started production in April 2013, has also bolstered the finances – and market confidence – of Noble and Delek.

“At the time Woodside came in, [Delek group controlling shareholder Yitzhak] Tshuva did not have much cash – but that has changed dramatically,” said the source. “At this point, why [would he] reduce his stake in Leviathan to 30% when he could keep it at 45%?”

Delek’s successful bond issue has offered significant encouragement to minority Leviathan shareholder Ratio Oil. The company will now look to raise roughly $200 million through bonds, a source told Interfax. The Leviathan partners might also sell a 5% stake in the project to a financial partner to bring in additional cash.

“There have also been some general enquiries among financial investors to purchase a small stake of Leviathan – and it will be at a much higher price than Woodside would have paid,” the source said.
Even if Woodside’s experience became of diminishing strategic importance to the Leviathan partners, the threat of a major foreign investor withdrawing from the project – potentially delaying its development – may have proved a useful tool for bargaining with Israeli regulators, a source told Interfax.


Last-minute lease


In the hours before Coleman was due to sign the farm-in agreement on 27 March, the Leviathan partners secured both a lease for the Leviathan field development and reached a settlement with the anti-trust commissioner over Noble and Delek’s alleged monopoly over the gas market in Israel.

“I think everybody could read the new setting, and they got what they wanted. Negotiations with Woodside offered [the Leviathan partners] leverage vis à vis the ministries here; they reached an agreement with the anti-trust authority and secured a production licence with the ministry of energy,” the source said. “Once these were in place – and having more money than they had before – why should Noble and Delek reduce their stakes?”


Link to source: http://interfaxenergy.com/gasdaily/article/8428/woodside-drops-leviathan-but-small-flng-may-still-happen?dm_i=1ZRI,2H9IW,G3ABZ6,90VDO,1

Gas and CCS key to transition – Shell | Interfax

By James Batty, 20 May 2014 13:21 GMT

Oil and gas reserves will not become worthless in coming decades as a result of emissions reduction legislation, while gas and carbon capture technology will play an increasingly important role, Shell said in an open letter to shareholders this month.

The letter, signed by JJ Traynor, Shell’s executive vice president of investor relations, was written in response to activist shareholder groups that have warned future legislative changes could render oil and gas reserves uneconomic to produce. The most high-profile example this year was a report from the Grantham Institute that said the scale of carbon risks needs to be taken into account when pricing equities and bonds from oil and gas companies.

Activist groups


ExxonMobil published a similar response earlier this year as oil companies take a harder line with activist groups seeking to divert money from oil and gas stocks towards renewable energy companies (see Switch to gas key to reducing emissions – Exxon, 1 April 2014).

“While the ’stranded asset’ notion may appear to be a strong and thought-through case, it does have some fundamental flaws and there is a danger that some interest groups use it to trivialise the important societal issue of rising levels of CO2 in the atmosphere,” Traynor said in the letter.

He claims the activist groups fail to acknowledge the growing demand for energy; the crucial role of carbon capture and storage (CCS) technology; and the prospects for the gas, bioenergy and energy efficiency sectors.

The letter was dated 16 May, but was published on Tuesday to coincide with Shell’s annual shareholder meeting in the Hague.

In a similar way to Exxon’s response, Traynor also accused the activist groups of distracting attention from the need to meet growing energy demand in developing countries.

He added the company’s response to the threat of climate change is to expand its gas business, as well as investing in low-carbon biofuels, CCS technology and energy efficiency measures.

“The role of CCS in helping the world to avoid the worst effects of climate change is critical,” he said, outlining Shell’s view that fossil fuels will remain the dominant energy source until 2050.

The company uses a price of $70-110 per barrel of oil, $3-5/MMBtu of gas, and $40 per ton of CO2 when assessing the viability of projects.

He concluded that, while Shell does believe a “fundamental transition of the energy system will be needed”, it will “take considerably longer than some alarmist interpretations of the unburnable carbon issue would have the public believe”.

SOURCE

Wednesday, May 21, 2014

Woodside terminates Leviathan deal | Jerusalem Post

Woodside terminates Leviathan deal

05/21/2014 09:34

After months of negotiations, Woodside says that the parties failed to reach a commercially acceptable outcome.

Leviathan holds 453 billion cu.m. of gas [file]
Leviathan holds 453 billion cu.m. of gas [file] Photo: Courtesy of Albatross
Australian hydrocarbon firm Woodside Energy has officially withdrawn from a $2.71 billion deal to acquire a 25 percent share of the Leviathan natural gas reservoir, the company announced overnight on Tuesday.

The termination of the agreement follows months of uncertainty regarding the expected partnership, due to disputes between the Australian firm and the Israeli Tax Authority. After signing a memorandum of understanding with the Leviathan partners on February 7, Woodside was expected to sign an official agreement for the acquisition on March 27. Yet by that day's end, the agreement did not pan out due to the disagreements between Woodside and the Tax Authority.
In the official announcement overnight on Tuesday, Woodside said that negotiations among the parties failed to reach a commercially acceptable outcome, which would have enabled the full-term agreements to be implemented.

Woodside CEO Peter Coleman stressed that the decision to pull out of the deal was difficult and not taken lightly.

“All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal,” Coleman said. "While Woodside’s commitment to growth is strong, even stronger is our commitment to making disciplined investment decisions.”

With sufficient hydrocarbon supplies for decades of domestic use and export, Leviathan – located about 130 km. west of Haifa – is estimated to contain about 535 billion cu.m. (18.9 trillion cu.ft.) of natural gas and 34.1 million barrels of liquid condensate.

Houston-based Noble Energy holds 39.66% of the Leviathan field, Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each hold 22.67%, and Ratio Oil Exploration owns 15%. The reservoir is expected to be in operation sometime in 2017.

"I would like to acknowledge and thank the Leviathan Joint Venture participants and the Israeli Government for working with us," Coleman said.

Following the termination, Noble Energy Chairman and CEO Charles Davidson stressed that development of the field would go on, despite the loss of the agreement.

"The plans for development of the Leviathan discovery have significantly changed since we began the search for a partner approximately two years ago," Davidson said. "Perhaps the most dramatic changes have been associated with the growth in the regional markets.  The emergence of these regional markets, which are accessible through pipeline outlet, has pushed the need for LNG [liquefied natural gas] into a later phase of development versus our earlier plans."

Although an export policy was approved by the government on June 23, 2013, capping exports at 40%, the question has long remained to whom the Leviathan partners will export the gas.

In January 2017, the Leviathan partners signed a $1.2b. sale agreement with the Palestine Power Generation Company, through which the firm would buy around 4.75 billion cu.m. of gas for a period of 20 years – to fuel a future 200-megawatt power plant in Jenin.

Most recently, the partners of the neighboring, grid-connected Tamar reservoir – of which Noble Energy and Delek are also the major stakeholders – signed a letter of intent two weeks ago with Spanish firm Union Fenosa Gas to supply gas to the company's existing gas liquefaction facilities in Egypt. If that letter of intent progresses into a real agreement, the parties would partake in a 15-year contract with a total gross sale quantity of up to 71 billion cu.m. of gas.

In February, the Tamar partners also signed a $500m. deal with the Jordanian firms Arab Potash and Jordan Bromine to provide 1.8 billion cu.m. of gas to the companies over 15 years, beginning in 2016.
For exports outside of the immediate neighborhood, experts have debated whether a pipeline to Turkey, an LNG plant onshore in Israel, a shared LNG plant onshore in Cyprus, a floating LNG plant, use of the Egyptian LNG facilities or some combination of these options would make the most sense. Through the Turkish pipeline, the gas could reach European buyers, while through an LNG plant, the hope would be to reach the Asian market.

As far as Leviathan in particularly is concerned, Noble Energy said on Tuesday overnight that the initial development phase for the reservoir will involve building a 0.045 billion.-cu.m.-per-day floating, production, storage and offloading (FPSO) system, to provide natural gas to Israel and surrounding regional markets. Front-end engineering and design studies would continue, however, for the second phase of development, which will likely involve a floating liquefied natural gas (F-LNG) production system, Noble Energy said.
When Woodside was expected to be involved in the reservoir's development, the company had prioritized the idea of F-LNG export for Leviathan, stressing that this would be the preferred method of export. As part of the terminated deal, Woodside would have operated any liquefied natural gas development for the reservoir.

The Leviathan partners, however, remained undeterred following the deal's failure.

"While we have not been able to reach a mutually acceptable agreement with Woodside, we continue to move forward with our partners and the Israeli government with plans to develop this world-class asset for the benefit of all stakeholders," Davidson said.


Link to source: http://www.jpost.com/Business/Business-News/Woodside-terminates-Leviathan-deal-352893

Tuesday, May 20, 2014

The Energy Ministry sees gas royalties of NIS 2.1 billion annually by 2020 | Globes

Natural gas royalties to quadruple by 2020

Tamar gas drilling

The Energy Ministry sees gas royalties of NIS 2.1 billion annually by 2020.



Government revenues from natural gas royalties will consistently grow until 2020 from when they will total NIS 2.1 billion annually according to a forecast from the Ministry of National Infrastructures, Energy and Water Resources' Natural Resources Administration Division of Royalties, Accounting and Economics.
This is quadruple the revenue from royalties in 2013 which amounted to NIS 543 million, and tenfold the royalty revenues of NIS 233 million in 2012.

The forecast includes natural gas royalties, oil and natural quarrying materials such as phosphates and copper (not including royalties from the Dead Sea Works). According to this forecast overall royalties between 2014 and 2020 will amount to NIS 9.7 billion. Natural gas royalties will account for 94% of the royalties received over this period. The Sheshinski Committee kept the rate of royalties from natural gas at 12.5%.
Energy Minister Silvan Shalom said, "The Ministry is working to expand royalty collection to increase State revenues and reduce the cost of living. The special expertise that the ministry has gained allows it to operate the best and most effective control mechanism in natural resources royalties."

According to the Energy Ministry there will be a sharp rise in State revenue from 2018 when gas starts flowing from the Leviathan field. In March, The Petroleum Commissioner issued owners notes for Leviathan requiring the field's operators to develop and produce natural gas from the license area according to a prearranged timetable.

Published by Globes [online], Israel business news - www.globes-online.com - on May 19, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014


Link to source: http://www.globes.co.il/en/article-natural-gas-royalties-to-quadruple-by-2020-1000939755

Noble execs haven’t abandoned onshore LNG plant yet | Cyprus Mail

- 10 Comments

Noble execs haven’t abandoned onshore LNG plant yet

Noble execs haven’t abandoned onshore LNG plant yet
By Elias Hazou

A DELEGATION of Houston-based Noble Energy is reportedly in town to talk shop over a potential deal for an onshore liquefied natural gas (LNG) plant, while an energy official has stressed that the window for such a terminal may be fast closing.

Daily Politis wrote that a Noble team has arrived for more talks geared at a final LNG project agreement with the government. The on-and-off talks, described by the government as “ongoing,” began last year, were halted in November, then were set to resume in earnest in January of this year but never did – until now.

The Mail learns that at least two senior Noble officials – Barry Shelden (Cyprus Business Unit Manager) and Greg Beard (Commercial Manager, Cyprus LNG) – are currently on the island, but it was not clear whether they’re part of the mission cited by Politis.

Mike Efthymiou, a non-executive director with the Cyprus Hydrocarbons Company (CHC) and special adviser to the President on energy affairs, told Politis there still exists an opportunity for Cyprus to pool its gas reserves with Israel’s massive Leviathan gas field in a mooted LNG plant at Vassilikos.

Currently, Cyprus’ proven gas reserves are on their own insufficient to warrant operation of an onshore LNG facility.

The proposal for joint Cyprus-Israeli exports – initially floated by Noble’s Leviathan partner Delek – dates back to 2010 or 2011.

Late last year, Noble unveiled their development plans for their East Med gas finds. The first phase of development would see Noble and their partners supply Israel, the Palestinian Authority and Jordan. The second phase is a floating LNG (FLNG), and the third phase is regional supply agreements – with Turkey, Egypt and lastly Cyprus being potential destinations.

Efthymiou conceded that, where the Leviathan project is concerned, the FLNG option is gaining ground over a land-based solution, diminishing the prospects for an LNG terminal in Cyprus. He said the government is currently assessing “all options,” though the onshore facility remains its number one strategic choice.

Eftymiou opined that a Cyprus LNG plant is still possible. But time is running out – the Leviathan partners are expected to reach a decision on the second phase of development (FLNG) by autumn. That in turn indicates that discussions between the government here and Noble over the next few weeks or months will be critical.

At any rate, were a final LNG project agreement with Noble to be clinched, that would not mean a land-based terminal is a dead cert; such a deal would most likely feature get-out clauses for both parties.
Alternatively, should an agreement with Noble fail to materialise, that is not the end of the road for the onshore LNG project due to the possibility of additional discoveries in other Cypriot concessions.

ENI-KOGAS are expected to drill sometime in the summer, and France’s Total will start exploration in the second half of next year. And Noble is planning a second exploratory well in their Block 12 concession by the end of 2014.

As it stands, the Aphrodite prospect in Block 12 contains 3.2 trillion cubic feet (tcf) of gas, at a 90 per cent probability – the probability that energy companies rely on when making commercial decisions. At a 50 per cent probability, Aphrodite has 3.6 tcf to 6 tcf.

Hypothetically, if it were possible for the 3.2 tcf to be monetised, it would fetch some $10bn in profit, 60 per cent of which would go to Cyprus, said gas expert Charles Ellinas.

He noted, moreover, that by the time Cyprus is able to export LNG to Europe – as an alternative to Russian gas, as media outlets have been suggesting amid the Ukraine crisis – the pricing would not be viable.

That’s because the cost of building a pipeline and an LNG plant would be in the area of $8 to $9 per million British thermal units (BTU), not including even regasification expenses.

But LNG in Europe by that time (after 2020) is expected to go for $9 to $10 per million BTU – not much of a profit margin for Cyprus and its partners.

The only way exports to Europe would be commercially viable is via ships transporting gas from floating LNG platforms, said Ellinas.

Meanwhile, in an interview with Bloomberg, energy minister Giorgos Lakkotrypis said Cyprus will have “a pretty good idea” of its gas and hydrocarbon reserves within about 12 to 15 months.

Lakkotrypis said ENI and KOGAS will start intensive exploration within weeks in their licenses in blocks 2, 3 and 9, a campaign to last 12 to 18 months.



Link to source: http://cyprus-mail.com/2014/05/20/noble-execs-havent-abandoned-onshore-lng-plant-yet/

Monday, May 19, 2014

ΚΡΙΣΙΜΕΣ ΟΙ ΕΠΟΜΕΝΕΣ ΕΒΔΟΜΑΔΕΣ | ΠΟΛΙΤΗΣ

ΕΡΧΕΤΑΙ ΣΗΜΕΡΑ Η NOBLE – ΚΡΙΣΙΜΕΣ ΟΙ ΕΠΟΜΕΝΕΣ ΕΒΔΟΜΑΔΕΣ
Παίζει ακόμα το τερματικό LNG
(Τελευταία Ενημέρωση 19/05 10:48)


Οι ελπίδες για μεταφορά φυσικού αερίου από το κοίτασμα Λεβιάθαν ή και από το Ταμάρ για υγροποίηση σε χερσαίο τερματικό στο Βασιλικό εξακολουθούν να υπάρχουν, σύμφωνα με τον ειδικό σύμβουλο του Προέδρου της Δημοκρατίας και μέλος του δ.σ. της Εταιρείας Υδρογονανθράκων Κύπρου Μάικ Ευθυμίου. Μιλώντας στον «Π», ο κ. Ευθυμίου χαρακτήρισε τις επόμενες λίγες εβδομάδες πολύ κρίσιμες για το τελικό ξεκαθάρισμα και υποστήριξε ότι, παρά τις περί του αντιθέτου πληροφορίες στο Ισραήλ και την Κύπρο, η κυβέρνηση και οι σύμβουλοι εξακολουθούν να το παλεύουν και διαπιστώνουν από τις επαφές τους με Αμερικανούς και Ισραηλινούς να υπάρχουν δυνατότητες για συμπερίληψη του κυπριακού τερματικού στα επιχειρησιακά πλάνα της Noble, της Delek και της Ratio Oil ακόμα για την πρώτη φάση εκμετάλλευσης του Λεβιάθαν.

Egypt-UFG must resolve legal disputes before Israeli imports approved | Interfax

Egypt-UFG must resolve legal disputes before Israeli imports approved

By Leigh Elston
Posted 19 May 2014 12:37 GMT
The Egyptian Petroleum Ministry will only allow Union Fenosa Gas to import gas from Israel once the two legal cases it is has launched against the government are resolved.

UFG, a joint venture between Spain’s Gas Natural and Italy’s Eni, started arbitration proceedings against Egypt in February for the government’s failure to deliver contracted gas supplies to the company’s Damietta LNG plant. UFG has been forced to idle the plant since December 2012 because of the gas shortage.

The lawsuit follows an earlier case launched by SEGAS – an 80/20 JV between UFG and Egypt’s state-owned Egyptian Natural Gas Holding Co. (EGAS) – in April 2013 against EGAS for failing to pay for its 40% of contracted capacity at Damietta.

An official source at the Ministry of Petroleum said in a statement that the Egyptian authorities will not approve imports of Israeli gas into Egypt “without solving all the outstanding issues of commercial arbitration”, and only if the transaction offers “high added value to the Egyptian economy”.

UFG signed the letter of intent with Noble Energy for the supply of 4.5 billion cubic metres per year of gas from the Tamar field to Damietta earlier in May. The letter covers the sale of 70.8 bcm of gas from Tamar to the plant over 15 years.

UFG and Noble aim to sign a final sales and purchase agreement for Tamar gas within six months, pending regulatory approvals in Israel and Egypt. Further clarity on whether the government is likely to approve the deal is expected following the Egyptian presidential elections at the end of May, in which former military chief Field Marshal Abdel Fattah al-Sisi is expected to claim victory.

However, this initial statement from the ministry sounds positive, sources told Interfax.



Link to source: http://interfaxenergy.com/gasdaily/article/8208/egyptufg-must-resolve-legal-disputes-before-israeli-imports-approved

Cyprus Drilling Success May Offer EU Gas Alternative to Russia | Bloomberg

May 19, 2014 2:00 AM GMT+0300


Cyprus, which has proven reserves of as much as 6 trillion cubic feet of natural gas, is looking to find another 4 trillion to 5 trillion cubic feet, Energy Minister George Lakkotrypis said. Such a discovery, about a quarter the size of Israel’s giant Leviathan find, would allow the country to proceed with plans for a liquefied natural gas terminal.

An LNG plant on Cyprus could also process gas from elsewhere in the Levant Basin, an area that may hold 122 trillion cubic feet of gas, and ship it by sea to markets in western Europe, where supplies are now threatened by the crisis in Ukraine. Russia, which provides about 15 percent of the region’s needs through Soviet-era pipelines crisscrossing its western neighbor, has threatened to cut supplies from June.

Cyprus will have “a pretty good idea” of its gas and hydrocarbon reserves within about 12 to 15 months, as companies including Eni SpA (ENI), Korea Gas Corp., and Total SA start exploration, Lakkotrypis said in an interview May 14.

Eni and Kogas will start intensive exploration within weeks in their licenses in blocs 2, 3 and 9, a campaign to last 12 to 18 months, he said. France’s Total, with licenses for blocs 10 and 11, will start exploration in the second half of next year.

Noble Energy Inc., which found proven reserves of 3.6 trillion to 6 trillion cubic feet in the Aphrodite field, will drill another well in bloc 12, Lakkotrypis said.

Israeli Gas

Noble was also responsible for the 2010 Leviathan discovery, then the world’s biggest in a decade. Cyprus last year held talks with the Houston-based explorer on the potential for taking supplies from the Israeli field for export from a Cypriot LNG plant.

An LNG plant would require upfront capital expenditure of 6 billion euros ($8.2 billion) to 10 billion euros, and Cyprus is in talks with “large financial institutions which have expressed an interest in participating,” Lakkotrypis said.

“The most pressing priority is to make another discovery,” before looking at financing options, he said in his ministry office in Nicosia. “Ultra-deep waters contain a very high risk. The probability of success is pretty low.”

Cyprus is negotiating the terms and conditions for operating an LNG plant with Noble and will make a final investment decision by 2016-2017, he said.

Turkey Dispute

If sufficient gas reserves aren’t found, other options, including pipelines to existing plants in neighboring countries, are being explored. “We are not excluding anything, but the onshore plant is our No. 1 priority.”

A pipeline to Turkey isn’t an option unless the countries resolve their territorial dispute. Since 1974, when Turkey invaded the island, the country has been divided into the internationally recognized Republic of Cyprus in the south and the Turkish Republic of Northern Cyprus. A new round of reunifications talks has now entered a “substantive phase,” according to the United Nations.

Energy is one of the main potential growth sources for the island-nation’s economy, which is mired in deep recession, following a 10 billion-euro international bailout that came with strict austerity measures and included the imposition of losses to bank depositors.

To contact the reporters on this story: Nikos Chrysoloras in Nicosia at nchrysoloras@bloomberg.net; Georgios Georgiou in Nicosia at ggeorgiou5@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Alex Devine, Randall Hackley

Link to source: http://www.bloomberg.com/news/2014-05-18/cyprus-drilling-success-may-offer-eu-gas-alternative-to-russia.html

Sunday, May 18, 2014

Egyptian gov't sets out terms for Tamar gas deal | Globes

Union Fenosa will reportedly withdraw its lawsuit as part of approval of the Tamar deal.


Egypt's Ministry of Petroleum announced on Friday that the government will only approve the pending sale of natural gas by the partners in the Tamar gas field "if it creates substantial added value for the Egyptian economy." It said that the Egyptian government has added another condition: that the deal with Spain's Union Fenosa SA (BMAD: UNF), which operates the Damietta liquefied natural gas (LNG) facility, will only be approved if the company withdraws its claim against the government.



Union Fenosa's $6 billion lawsuit against the Egyptian government is in arbitration. It sued the government, after it banned gas exports, because of the domestic gas shortage, resulting in the company being in breach of contracts with customers in Europe and Asia.

Union Fenosa will reportedly withdraw its lawsuit as part of approval of the Tamar deal, so the Egyptian condition is in line with the company's interests. Union Fenosa said in response to the Ministry of Petroleum's statement, "It can be cautiously said that this is a positive step that indicates goodwill to manage serious negotiations."

The Egyptian government owns 20% of the Damietta LNG plant. When the letter of intent for the sale of gas from Tamar was signed in late April, the partners - Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), Isramco Negev 2 LP (TASE: ISRA.L), and Alon Natural Gas Exploration Ltd. (TASE: ALGS) - predicted that an agreement would be signed in six months, after Egypt's presidential elections.

Union Fenosa, which has had no natural gas deliveries since 2012, sued the Egyptian government with the International Court of Arbitration. BG Group plc (NYSE; LSE: BG), which owns the LNG plant at Ideko, reported a loss of $1.5 billion in 2013 because of reduced Egyptian gas deliveries and its CEO has announced his resignation.

BG Group is also in talks with the rights holders in Leviathan - Noble Energy, Delek, and Ratio Oil Exploration (1992) LP (TASE:RATI.L) - for the purchase of double the quantity of natural gas than Union Fenosa, for a total of up to $40 billion.

Under the letter of intent between the partners in Tamar and Union Fenosa, it will buy up to 2.5 trillion cubic feet (TCF) of gas over 15 years for a total of $20 billion. This amounts to the entire unsold gas at Tamar plus the gas from the adjacent Tamar SW field. The deal is still subject to approval by the Israeli government and the obtaining of an export license - provided it meets the terms of the government's gas exports decision.

Published by Globes [online], Israel business news - www.globes-online.com - on May 18, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014


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