Saturday, August 23, 2014

Our View: Lakkotrypis should not be raising unrealistic expectations | Cyprus Mail



Our View: Lakkotrypis should not be raising unrealistic expectations

Our View: Lakkotrypis should not be raising unrealistic expectations Energy Minister Giorgos Lakkotrypis

ENERGY Minister Giorgos Lakkotrypis said that Cyprus would be able to have ‘specific talks’ with Egypt, about the sale of natural gas, at the end of this year, after the completion of the first exploratory drilling by the ENI-KOGAS joint venture. The joint venture is expected to carry out exploratory drilling in plots 2, 3 and 9, and should have preliminary results for one of them by the end of the year, said Lakkotrypis.

Then, there would be talks with Egypt which was facing ‘an energy crisis’ and was desperate to secure a supply of natural gas. The minister was very optimistic in entertaining the idea he would be able to talk business with the Egyptian government by the end of this year. He should know better than anyone else that oil and gas companies, because of the hit-and-miss nature of their work and the equipment they require, operate at a much slower pace than normal businesses. Even the leasing of equipment required for drilling takes months to arrange and months to deliver; and the exploratory drilling, which is followed by more drilling.

How on earth will Lakkotrypis be able to have specific talks with Egypt at the end of the year, when only the exploratory drilling might be completed by then? If the time it has taken Noble Energy to complete one phase of drilling in block 12 – more is reportedly planned – is anything to go by, it will be 2016 before ENI-KOGAS has an accurate indication of the quantity of natural gas under the sea that would be sold to Egypt, assuming it has not secured supplies from elsewhere in the meantime.

Perhaps the minister felt obliged to say something positive after his visit to Egypt, but he should have been more pragmatic. He knows better than anyone else about the slowness at which the oil and gas industry operates and he should be conveying this to the public instead of raising unrealistic expectations. He knows that taking decisions relating to hydrocarbons is a very long-winded process because of the many unknown factors that have to be taken into account and the different players involved in the process. A decision has still to be taken about the construction of the LNG terminal, despite the government’s oft-declared commitment to it, because of these reasons.

This is why it is very important for members of the government to refrain from fuelling speculation and raising expectations. When it comes to hydrocarbons, ministers would be taken more seriously and inspire more confidence about being in control of their brief, the less they say.


Link to source: http://cyprus-mail.com/2014/08/23/our-view-lakkotrypis-should-not-be-raising-unrealistic-expectations/

Thursday, August 21, 2014

Israel Nears Gas Sales to Egypt as Mideast Unrest Flares | Bloomberg




Israel Nears Gas Sales to Egypt as Mideast Unrest Flares

Guenther Oettinger, who leads European energy policy as a commissioner at the European... Read More
In the midst of some of the worst Middle East tensions in a decade, one-time enemies Egypt and Israel are negotiating deals that may mean the sale of $60 billion in Israeli natural gas to liquefaction plants in Egypt.
The talks come as Israel resumes air strikes on Gaza after Hamas, which the U.S. and the European Union classify as a terrorist group, fired rockets following a breakdown in Egypt’s efforts to broker a cease-fire. The move is all the more improbable because Egypt -- little more than a year ago -- was under the sway of the Muslim Brotherhood, which had begun to steer the country away from viewing Israel as a trading partner.
Noble Energy Inc. (NBL) and units of Israel’s Delek Group Ltd. (DLEKG) plan to deliver as much as 6.25 trillion cubic feet of gas from the Tamar and Leviathan offshore fields to LNG facilities in Egypt’s Damietta port and the coastal town of Idku. Executives said this week they expect to finalize the agreements by year-end.
 
With Cairo peace talks to end the war in the Gaza Strip faltering, the trade agreements offer the potential to strengthen relations between the region’s largest economy and its most populous. The two offshore fields have more than enough gas to supply Israel for decades. The country is seeking a way to export the excess, and shipping it to Egypt will be faster than building LNG plants.

“From these LNG plants in Egypt, Israeli gas can reach European and Asian markets,” said David Shrem, a Tel Aviv-based portfolio manager at Sphera Funds Management Ltd. The deals “are the first significant ones for regional exports.”

Mediterranean Pipelines

Noble, based in Houston, and the Delek units Delek Drilling-LP and Avner Oil Exploration LP (AVNRL), expect to send gas through pipelines under the Mediterranean Sea. They signed a non-binding agreement in June to deliver the fuel to BG Group Plc (BG/)’s LNG plant in Idku, and reached a similar deal in May to sell gas to Spain-based Union Fenosa Gas SA’s Damietta plant.

Delek’s units expect those deals to be finalized by year-end, as per company filings, according to an e-mailed statement Aug. 17. That echoes comments made by Noble’s president and chief operating officer David Stover in July. Tamar started production last year and Leviathan is scheduled to begin output in 2018.

Delek Group declined an eighth day, closing down 0.3 percent, and Delek Drilling fell a seventh day to close 0.1 percent lower in Tel Aviv.

The two accords provide for sales of as much as 6.25 trillion cubic feet of gas over 15 years, Noble and its Israeli partners said. That would be worth more than $60 billion at current prices in the U.K.

Export Revenue

The agreements would bring billions of dollars a year of export revenue to Israel. Exporting by pipeline would be faster than developing its own liquefying infrastructure, said Guil Bashan, an analyst at Tel Aviv-based IBI-Israel Brokerage & Investments Ltd., as building LNG plants would take years, cost billions of dollars and entail a long regulatory process.

Under Egyptian President Abdel-Fattah El-Sisi, the former army chief who led the military’s removal of the Muslim Brotherhood last year, Egypt’s relations with Israel have improved. That’s opened a window for gas-export agreements as Israel’s prolonged conflict with Hamas fighters continues in the Gaza Strip.

The Union Fenosa and BG plants in Egypt have been unable to fulfill long-term contractual commitments to European and Asian buyers as the country diverts gas to supply domestic consumers. That means Israeli gas would help achieve two important goals: meeting the country’s growing energy demands and maintaining public support, said Michael Leigh, a senior adviser to the German Marshall Fund of the United States.

Gas Reversal

The agreements would be a reversal from the past. Egypt used to export gas to Israel until a series of bombings against the Sinai supply pipeline led to its closing in 2012. Relations between Israel and Egypt deteriorated after former President Hosni Mubarak was overthrown in 2011, and his eventual replacement by Muslim Brotherhood leader Mohamed Mursi.

The ouster of Mursi in July 2013 has led to better ties with Israel. Egypt helped broker cease-fire agreements between Israel and Hamas.
Egypt’s Minister of Petroleum & Mineral Resources Sherif Ismail said Aug. 13 that no agreement has been reached regarding Israeli gas imports. Maya Etzioni, a spokeswoman for Israel’s Ministry of National Infrastructures, Energy and Water Resources, declined to comment.

Turkey
, another potential export destination, no longer appears to be an option.

The strain on relations with Israel because of Gaza has negatively affected energy projects, Turkish Energy Minister Taner Yildiz said in Ankara today.

There could be no “economic feasibility” without political reconciliation, he said. “I’m sure the private sector has, in its mind, suspended projects regarding Israel.”

‘Turkey Option’

“A pipeline to Turkey will not be built under current political conditions,” Leigh said. “The Turkey option faces serious political and economic constraints.”

Israel has other export options. Noble and its Leviathan partners, Delek, Avner and Ratio Oil Exploration 1992 LP (RATIL), are considering a pipeline to Cyprus, according to an April investor presentation from Delek Drilling. And the Tamar partners signed an accord in February to supply Jordan-based Arab Potash Co. with fuel, starting in 2016.

Guenther Oettinger, who leads European energy policy as a commissioner at the European Commission, said last month that the EU wants to encourage the development of Mediterranean oil and gas resources to secure sustainable and affordable energy. Israel’s island neighbor Cyprus has also made major gas discoveries under its seabed.

“Recent developments concerning Russia and Ukraine have made energy security a top priority for Europe and the EU is scrutinizing all potential sources,” said Leigh, a former director general in the European Commission. “Greater attention will probably be focused on the Eastern Mediterranean and Israeli gas as a result.”

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net
To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net James Doran




Link to source: http://www.bloomberg.com/news/2014-08-20/israeli-gas-to-reach-global-market-via-pipelines-to-egypt.html

Eni starts production at DEKA project in Egypt | Reuters


Eni starts production at DEKA project in Egypt

Thu Aug 21, 2014 8:35am GMT
 
[-Text [+]
MILAN Aug 21 (Reuters) - Italian oil and gas group Eni said on Thursday it had started production at the offshore DEKA gas project in Egypt in joint venture with BP .
In a statement, Eni said the project was producing 1.8 million cubic meters of gas per day as well as associated condensates of around 800 barrels per day.
DEKA's production is expected to reach peak in the first quarter of next year with a total gross gas rate of about 6.5 million cubic meters per day.
Eni, the biggest foreign energy player in Egypt, has been present in the country since 1954 and produced about 228,000 barrels of oil equivalent per day last year. (Reporting by Stephen Jewkes)

Link to source: http://af.reuters.com/article/energyOilNews/idAFI6N0Q502020140821

Talks with Egypt on potential natural gas sale after ENI-KOGAS drilling results | Cyprus Mail

 2 Comments

Talks with Egypt on potential natural gas sale after ENI-KOGAS drilling results

Talks with Egypt on potential natural gas sale after ENI-KOGAS drilling resultsMinister of Energy, Commerce, Industry and Tourism Yiorgos Lakkotrypis,
NICOSIA will enter into concrete talks with Cairo over a possible natural gas sale to Egypt after the first results of the exploration activity by ENI-KOGAS in Cypriot offshore blocks 2,3 and 9, Cyprus Energy Minister Giorgos Lakkotrypis has said.
In statements following a meeting of the Council of Ministers, Lakkotrypis made clear that the construction of a natural gas liquefaction terminal remained a priority for Nicosia, adding however that in the long-term Cyprus should diversify its export options.
Lakkotrypis’ statements came after his visit to Cairo for the meeting of the joint technical committee which, inter alia, “explored technical options with regard to a possible future transport of Cypriot natural gas to Egypt.”
Lakkotrypis said Egypt was currently suffering from a severe energy crisis and is “desperately seeking natural gas imports.”
He said that he briefed his Egyptian counterparts over Nicosia`s planning and for the next exploration drilling by the Italian-Korean consortium ENI-KOGAS in blocks 2,3,9. Cyprus has already identified four possible natural gas reservoirs.
“The first results at least from the first drilling are expected before the end of the year and we agreed that at that point we will be ready to engage in more concrete talks over the sale of natural gas at least,” Lakkotrypis said.
Noting that the discussions on a technocratic level would continue, the minister said: “It was clear that for our part the LNG terminal is a priority on the condition of the results we will have in the end of the year.”
Responding to a question on Nicosia`s broader planning on the issue of natural gas, Lakkotrypis said the planning did not cover the LNG terminal only. “Cyprus can export to its customers in multiple ways, Certainly the LNG plant is the first option but in the long-term we should have a diversification of exports, provided that we have sufficient natural gas resources, which, we hope, will be proven in the next months, at least for the eastern offshore blocks where the consortium ENI-KOGS operates.”
So far US Noble Energy discovered a gross natural gas reservoir of 4 trillion cubic feet in block 12. However this reserve is not considered sufficient to sustain an onshore LNG plant. Nicosia is awaiting the exploration drilling by the consortium ENI-KOGAS in blocks 2,3 and 9, while French giant TOTAL is expected to begin exploration activity in blocks 10 and 11 in the second half of 2015.
According to an official press release, during his stay in Cairo, Lakkotrypis held separate meetings with the Egyptian Ministers of Petroleum, Mineral Resources Sherif Ismail and Industry and Commerce Mounir Fakhri Abdel Nour. His visit took place in the context of preparing the meeting of the presidents of Cyprus and Egypt in New York on the sidelines of the UN General Assembly.
Lakkotrypis and Ismail presided over the meeting of the Cyprus-Egypt joint technical Committee on hydrocarbons, which discussed the course and planning of the two countries with regard to hyrdrocarbons exploration and exploitation in their respective Exclusive Economic Zones, as well as ways of enhancing their strategic cooperation on energy issues.

Link to source: http://cyprus-mail.com/2014/08/21/talks-with-egypt-on-potential-natural-gas-sale-after-eni-kogas-drilling-results/

Israeli Gas to Reach Global Market Via Pipelines to Egypt | Bloomberg News

Bloomberg News

Israeli Gas to Reach Global Market Via Pipelines to Egypt

August 20, 2014

In the midst of some of the worst Middle East tensions in a decade, one-time enemies Egypt and Israel are negotiating deals that may mean the sale of $60 billion in Israeli natural gas to liquefaction plants in Egypt.
The talks come as the terrorist group Hamas continues to lob missiles at Israel, despite Egypt’s continuing efforts to broker a ceasefire. The move is all the more improbable because Egypt -- little more than a year ago -- was under the sway of the Muslim Brotherhood, which had begun to steer the country away from a long-held pragmatic Egyptian view of Israel as a trading partner.
Noble Energy Inc. (NBL:US) and units of Israel’s Delek Group Ltd. (DLEKG) plan to deliver as much as 6.25 trillion cubic feet of gas from the Tamar and Leviathan offshore fields to LNG facilities in Egypt’s Damietta port and the coastal town of Idku. Executives said this week they expect to finalize the agreements by yearend.
With Cairo peace talks faltering to end the war in the Gaza Strip, the trade agreements offer the potential to strengthen relations between the region’s largest economy and its most populous. The two offshore fields have more than enough gas to supply Israel for decades. The country is seeking a way export the excess and shipping it to Egypt will be faster than building LNG plants.
“From these LNG plants in Egypt, Israeli gas can reach European and Asian markets,” said David Shrem, a Tel Aviv-based portfolio manager at Sphera Funds Management Ltd. The deals “are the first significant ones for regional exports.”

Mediterranean Pipelines

Noble, based in Houston, and the Delek units Delek Drilling-LP and Avner Oil Exploration LP, expect to send gas through pipelines under the Mediterranean Sea. They signed a non-binding agreement in June to deliver the fuel to BG Group Plc (BG/)’s LNG plant in Idku, and reached a similar deal in May to sell gas to Spain-based Union Fenosa Gas SA’s Damietta plant.
Delek’s units expect those deals to be finalized by year-end, as per company filings, according to an e-mailed statement Aug. 17. That echoes comments made by Noble’s president and chief operating officer David Stover in July. Tamar started production last year and Leviathan is scheduled to begin output in 2018.
The two accords provide for sales of as much as 6.25 trillion cubic feet of gas over 15 years, Noble and its Israeli partners said. That would be worth more than $60 billion at current prices in the U.K.

Export Revenue

The agreements would bring billions of dollars a year of export revenue to Israel. Exporting by pipeline would be faster than developing its own liquifying infrastructure, said Guil Bashan, an analyst at Tel Aviv-based IBI-Israel Brokerage & Investments Ltd., as building LNG plants would take years, cost billions of dollars and entail a long regulatory process.
Under Egyptian President Abdel-Fattah El-Sisi, the former army chief who led the military’s removal of the Muslim Brotherhood last year, Egypt’s relations with Israel have improved. That’s opened a window for gas-export agreements as Israel’s prolonged conflict with Hamas fighters continues in the Gaza Strip.
The Union Fenosa and BG plants in Egypt have been unable to fulfill long-term contractual commitments to European and Asian buyers as the country diverts gas to supply domestic consumers. That means Israeli gas would help achieve two important goals: meeting the country’s growing energy demands and maintaining public support, said Michael Leigh, a senior adviser to the German Marshall Fund of the United States.

Gas Reversal

The agreements would be a reversal from the past. Egypt used to export gas to Israel until a series of bombings against the Sinai supply pipeline led to its closing in 2012. Relations between Israel and Egypt deteriorated after former President Hosni Mubarak was overthrown in 2011, and his eventual replacement by Muslim Brotherhood leader Mohamed Mursi.
The ouster of Mursi in July 2013 has led to better ties with Israel. Egypt helped broker cease-fire agreements between Israel and the militant Hamas organization that runs the Gaza Strip and is classified as a terrorist organization by the U.S. and the European Union.
Egypt’s Minister of Petroleum & Mineral Resources Sherif Ismail said Aug. 13 that no agreement has been reached regarding Israeli gas imports. Maya Etzioni, a spokeswoman for Israel’s Ministry of National Infrastructures, Energy and Water Resources, declined to comment.
Turkey, another potential export destination, no longer appears to be an option. Turkish Energy Minister Taner Yildiz said this month there won’t be any gas deals with Israel unless a long-term cease-fire is achieved in Gaza.



Link to source: http://www.businessweek.com/news/2014-08-20/israeli-gas-to-reach-global-market-via-pipelines-to-egypt

Wednesday, August 20, 2014

Talks with Egypt on potential natural gas sale after ENI-KOGAS drilling results, Energy Minister says | CNA

Talks with Egypt on potential natural gas sale after ENI-KOGAS drilling results, Energy Minister says
CNA - Cyprus/NICOSIA 20/8/2014 19:27
 

Nicosia will enter into concrete talks with Cairo over a possible natural gas sale to Egypt after the first results of the exploration activity by ENI-KOGAS in Cypriot offshore blocks 2,3 and 9, Cyprus Energy Minister Yiorgos Lakkotrypis has said.

In statements following a meeting of the Council of Ministers, Lakkotrypis made clear that the construction of a natural gas liquefaction terminal remains a priority for Nicosia, adding however that in the long-term Cyprus should diversify its export options.

Lakkotrypis` statements came after his visit to Cairo for the meeting of the joint technical committee which, inter alia, “explored technical options with regard to a possible future transport of Cypriot natural gas to Egypt.

(CNA)

*The full text of the news item is available in the paid version of the CNA web service. Subscription Form

*CNA reserves the copyright to the news stories it files, which is granted to subscribers for specific use only.



Link to source: http://www.cna.org.cy/webnewsEN.asp?a=6e963d1312cb4b259818924da68b09ef

Monday, August 18, 2014

Cyprus: Energy potential, export options & revenue management | MESP

Cyprus: Energy potential, export options & revenue management

As Cyprus and licensed companies prepare to resume exploratory drilling, starting with the ENI-KOGAS consortium, which is expected to start drilling in Block 9 before summer’s end, Nicosia is, more than ever, determined to turn the island into an energy hub for the region. However, progress has been relatively slowed down as the country faces substantial challenges. While the appraisal drilling in Aphrodite was largely an excellent news, confirming the presence of significant gas reserves, the quantities in question were inferior to previous estimates. More gas, whether from new discoveries offshore Cyprus or from neighboring countries, is needed to justify the construction of an LNG plant in Vasilikos, the country’s chosen option for gas exports. The coming year will be instrumental for the Cypriot gas sector. Beside ENI-KOGAS, Texas-based Noble Energy is expected to conduct further drilling in Block 12 by early 2015, and Total, which holds exploration rights in Blocks 10 and 11 is expected to start drilling in the second half of 2015.
Middle East Strategic Perspectives asked Charles Ellinas, CEO and founder of ECP Cyprus Natural Hydrocarbons Company and former head of KRETYK, the national oil and gas company, to share his views on the latest developments in Cyprus, the Island’s export plans and ambitions to establish a regional energy hub.

Energy potential
Based on assessment of available data, it is estimated that all six blocks currently leased in Cyprus’ EEZ may potentially hold 1000 bcm of natural gas.
Noble/Delek/Avner completed appraisal drilling of Aphrodite, with initial results confirming 100 to 170 bcm with a mean of 145 bcm of high quality gas. There are good indications of other smaller gas fields in Block 12, with at least one estimated to hold 50-60 bcm. Noble plans to start drilling early 2015.
ENI/KOGAS have Blocks 2, 3 and 9 and are planning to start exploration drilling late 2014, with completion scheduled into 2016.
Total has Blocks 10 and 11, with potential for both oil and gas, and have now completed their seismic survey programme, with exploration drilling scheduled late in 2015.
Thus, by 2016, Cyprus will know exactly how much gas it has in its six licensed blocks.
Export options
If Cyprus is to maximize its benefits from gas it should retain flexibility in its export options so that it can access both the Asian and European markets. This is the reason why its export policy is centered on LNG. Since 2012, the government’s policy has been to base this on the development of an LNG plant at Vasilikos.
Depending on gas quantities and the regional political situation, Cyprus could also consider exports to regional markets, much as Israel is doing.
The main export options are:
  • LNG through a land based facility at Vasilikos
  • Floating LNG (FLNG)
  • Floating CNG (FCNG)
  • Export to Egypt and liquefaction at one of the underused LNG plants there
  • Pipeline to Greece and from there to Europe – this is a long shot but Greek companies are carrying out a detailed feasibility study.
Noble and its partners are evaluating export development options from Block 12 and are considering the feasibility of the first four options. If approval is given to proceed with one of these within the next 12 months then it should be possible to start LNG exports by 2020-21.
However, proceeding with a land based LNG facility would require more gas than what the Aphrodite gas field is known to hold now. Moreover, it would also require commitment to proceed with a second liquefaction train to make the project commercially viable for exports to the Far East. If this is to happen in the near future, it would require some gas to be committed to Vasilikos from Leviathan or to wait for the results of ENI’s drilling campaign. With the possibilities of Leviathan gas coming to Cyprus now been considered low, going forward would depend on ENI’s drilling results and a commitment by ENI to earmark about 200 bcm to Vasilikos, ie sufficient gas to supplement Block 12 gas and to guarantee a second liquefaction train.
FCNG is still a possible option for exports to countries in the region. It could also be combined with FLNG should more gas be found in a field once it goes operational.
Export to Egypt and liquefaction at one of the underused LNG plants there would be a challenge, not the least because with current liquefaction levels, the MoU with Union Fenosa, the LoI with BG and BG’s own LNG production, there will not be much capacity left for use by others.
This leaves FLNG. FLNG is a fast developing technology, with four projects already in the construction phase and ten more in the design stage. Noble and its partners are already known to be looking into implementing FLNG for Leviathan, targeting LNG exports to the Far East. Should this become a serious option then adopting FLNG for Block 12 would make sense. It is interesting to note that ENI is already well advanced in the use of FLNG as the main export option for its vast gas fields offshore Mozambique.
With the bulk of the gas in the leased Blocks expected to be in ENI’s and Total’s Blocks, serious gas exports from Cyprus will depend greatly on what these companies do.
Once ENI and Total complete their drilling programmes in 2016, it may take three more years before they assess the results and complete their development programmes. Given that whatever export options they choose it would take about four years to complete construction, the earliest they would be able to export gas from these Blocks is 2024, assuming no delays.
Potential markets
The key markets for the bulk of Cyprus gas are Europe and Asia, and more specifically Far East Asia. But costs and timing are critical factors.
Prices make the Far East a primary target, but with competition, increasing costs and timing are critical factors. An ever-increasing number of projects is targeting the Asian markets, seeking long-term sales contracts post-2020. With Australian LNG well ahead, East Africa and Russia planning to start exports by 2018 and North America soon after, East Med LNG may lose out on the Far East if it is not in a position to start exports by early 2020s.
China is actively securing long-term gas supplies, both by pipeline from central Asia, eg Turkmenistan, and as LNG imports. However, shale gas is expected to change China’s energy landscape significantly after 2020. After Ukraine, Russia is also looking more proactively to increase gas sales to Asia and the Far East.
But even in Asia the gas price scene is changing.
  • The gas price of the 38 bcm China-Russia deal is estimated to be $10 per mmBTU, about the same as the Russian gas supplied to Germany and much less than the current price in Japan of over $15 per mmBTU.
  • India is now in discussions with Russia for a similar deal and with the US for import of LNG.
  • Japan has decided to go back to nuclear power, thus reducing its future LNG needs.
  • Shale gas production in the US and elsewhere is increasing rapidly.
  • Driven by the Ukraine crisis North America is granting many more licenses for LNG export, but much of it will be destined for the Far East.
All of the above are expected to have a strong influence in reducing gas prices in Asia in the longer term below current expectations, some believe to as low as $10-12 per mmBTU. As a result, in Canada some of the LNG projects still at the planning stage are being reconsidered.
Timing for the construction of LNG export facilities, and costs, are becoming critical issues. It will become increasingly difficult to secure attractive Far East LNG sales contracts from 2020 onwards. Those LNG projects that are delayed, or are unable to find Far East buyers soon, because of costs, may face increasing pricing and finance risks with time. This would leave Europe, but the low gas prices make this market a challenge for LNG exports.
Gas prices in Europe are low and are expected to remain low, ie $8-10 per mmBTU. According to a study by MIT, a land based LNG facility at Vasilikos will mean a combined production and liquefaction cost of about $7.5-8 per mmBTU. With an additional $1.5-2 per mmBTU for transportation to Europe and regas the total cost would be $9-10 per mmBTU.
Thus, if Cyprus gas is to be competitive in Europe the export options are limited. In fact FLNG may be the main option. As Leviathan may also be going for FLNG this may be the way forward for East Med. As FLNG combines production and liquefaction in one facility, unit LNG costs may come down by 30-40% in comparison to a land based facility.
The Ukraine crisis is again altering the balance in Europe, with the EU inevitably declaring its intention to embark on a new drive to become less dependent on Russian gas. East Med gas could now be seen as one such source. Cyprus being an EU member should help.
Given that Leviathan is now progressing fast into the production and export stage, most Israeli gas exports may be destined for the Far East. Lebanon is way behind and given current problems, it will take a long time before it is in a position to consider exports. This leaves Cyprus. Given the pace of developments most of its gas will be ready for exports at about 2024, thus risking missing the Far East markets and relying on Europe. Not a bad thing but prices will dictate development options. The main export option is likely to be FNLG.
Development of hydrocarbon resources in the East Med should be a catalyst to encourage countries in the region to resolve their differences and share the benefits – and thus achieve win-win solutions. Even though these resources promise to be substantial, they are small in global terms and if not developed carefully and timely the opportunity to realize substantial benefits may be missed. Whichever way these resources are developed, significant financial benefits for Cyprus will not materialize earlier than ten years from now.
Revenue management
At various stages the government of Cyprus has declared that profits will go into a national hydrocarbons fund with similarities to the Norwegian sovereign wealth fund. This will be used to stabilize the economy and benefit future generations. IMF is already involved in this process and it is one of the commitments undertaken by Cyprus in its bailout agreement with its international lenders. This will ensure transparency and its success.
Cyprus, an attractive destination for investments  
Given its location, its EU membership, its excellent relationship with the other East Med countries and security, Cyprus is an ideal location for companies to use as a base to service the East Med offshore hydrocarbons industry and installations. Lebanon and Lebanese companies can benefit from this and the lessons learnt in developing this industry and pick and choose the best practices developed in this process.


Link to source: http://www.mestrategicperspectives.com/2014/08/18/cyprus-energy-potential-export-options-revenue-management/

Sunday, August 17, 2014

«Κωδικός» υδρογονάνθρακες σε δράση | ΦΙΛΕΛΕΥΘΕΡΟΣ

August 17, 2014 Του Κώστα Βενιζέλου

Μακρά, σημαντική και καυτή αναμένεται να είναι η ατζέντα για τα θέματα της ενέργειας τους επόμενους μήνες ενώ στη μεγάλη εικόνα μπαίνει πλέον και ο κωδικός «πετρέλαιο». Οι εξελίξεις στην περιοχή προκαλούν αναταράξεις και η Λευκωσία αναζητεί τρόπους να ενδυναμώσει τη θέση της, προβάλλοντας ως επιλογή τόσο για τις χώρες της περιοχής αλλά και ευρύτερα.

Είναι σαφές πως τα όσα διαδραματίζονται στη Μέση Ανατολή ( Ιράκ, Συρία, Τουρκία, Ισραήλ- Παλαιστίνιοι, αλλά και Αίγυπτος και Λιβύη), διαμορφώνουν νέα δεδομένα, ένα εκρηκτικό μείγμα, το οποίο δεν αποκλείεται να επιφέρει ανατροπές. Ο χάρτης της περιοχής αλλάζει συνεχώς και η Κύπρος θεωρείται, παρά τα σοβαρά προβλήματα που αντιμετωπίζει, Κυπριακό και οικονομία, πυλώνας σταθερότητας. Βασικά εργαλεία της Κυπριακής Δημοκρατίας είναι η γεωπολιτική της θέση και οι υδρογονάνθρακες.

Δυο γεωτρήσεις αλλά και πολλές επισκέψεις, στα πλαίσια πλέον της ενεργειακής διπλωματίας, βρίσκονται ψηλά στην ημερήσια διάταξη της Λευκωσίας, από τα αποτελέσματα των οποίων πολλά θα κριθούν.

Σε επίπεδο των εταιρειών, όπως είναι γνωστό εντός Σεπτεμβρίου η ΕΝΙ θα αρχίσει μια σειρά γεωτρήσεων που θα καλύψει τα τεμάχια 2,3,9 και με βάση ενδείξεις από σεισμογραφικά δεδομένα, δηλώνεται από πλευράς της εταιρείας «συγκρατημένη αισιοδοξία». Τα αποτελέσματα της πρώτης γεώτρησης αναμένονται μέχρι το τέλος του χρόνου. Την ίδια ώρα, αρχές του 2015, η NOBLE, με βάση και το συμβόλαιο, έχει υποχρέωση να προχωρήσει σε νέα γεώτρηση εντός του τεμαχίου 12. Η εταιρεία φαίνεται να προσανατολίζεται το γεωτρύπανο να δοκιμάσει για πετρέλαιο αντί φυσικού αερίου. Το γεγονός ότι η εταιρεία σκέφτεται σοβαρά να προχωρήσει σε έρευνες για πετρέλαιο είναι αποτέλεσμα και των ενδείξεων που έχει. Κι αυτό γιατί οι έρευνες για πετρέλαιο γίνονται σε μεγαλύτερο βάθος και στοιχίζουν γύρω στα 300 εκατομμύρια δολάρια ενώ για το φυσικό αέριο δεν ξεπερνούν τα 120 εκατομμύρια δολάρια.

Οι εξελίξεις αυτές με τις έρευνες, κυρίως τα αποτελέσματα της ΕΝΙ, θα αποτελέσουν και το πρόκριμα για την κατασκευή του τερματικού σταθμού στο Βασιλικό. Όπως πολλές φορές έχει δηλώσει δημόσια ο υπουργός Ενέργειας, Γιώργος Λακκοτρύπης αυτό αποτελεί την πρώτη προτεραιότητα για τη Λευκωσία. Την ίδια, όμως ώρα, έχουν διαμορφωθεί και εναλλακτικά σενάρια, ώστε να συμπληρωθεί το παζλ των ενεργειακών σχεδιασμών της Κύπρου.
Στα πλαίσια αυτά κινείται και η ενεργειακή διπλωματία. Αύριο Δευτέρα, ο Γιώργος Λακκοτρύπης μεταβαίνει στο Κάιρο, μαζί με ομάδα τεχνοκρατών, ώστε να πραγματοποιηθεί η συνεδρίαση της τεχνικής επιτροπής των δυο χωρών, στην παρουσία και των αρμόδιων υπουργών. Ο πρέσβης Τάσος Τζιωνής από το ΥΠΕΞ και μια ομάδα τεχνοκρατών του υπουργείου Ενέργειας θα παρατείνουν την εκεί παραμονή τους μέχρι τις 20 Αυγούστου, ώστε να συζητήσουν μια σειρά από θέματα με τους αντίστοιχους Αιγύπτιους ειδικούς. Στο Κάιρο η ατζέντα είναι μεγάλη και αφορά τόσο ζητήματα πώλησης φυσικού αερίου της Κύπρου προς την Αίγυπτο, όταν η Λευκωσία είναι έτοιμη, αλλά και θέματα διαμετακομιστικού εμπορίου. Η Αίγυπτος έχει μεγάλες ανάγκες από αέριο, τις οποίες θέλει να καλύψει με συμφωνίες. Για την Κύπρο το θέμα της πώλησης αερίου δεν είναι κάτι που μπορεί να γίνει αμέσως. Όμως, όπως ανέφεραν ενημερωμένες πηγές, αυτό μπορεί να επιτευχθεί πριν γίνει ο τερματικός σταθμός. Την ίδια ώρα, είναι σαφές πως για τη Λευκωσία δεν κλείνει η πόρτα για μεταφορά φυσικού αερίου από τα κυπριακά τεμάχια στους δυο τερματικούς σταθμούς που υπάρχουν στην Αίγυπτο ( σήμερα ένας εξ αυτών δεν λειτουργεί και ο άλλος υπολειτουργεί).

Ο Γ. Λακκοτρύπης θα επισκεφθεί διαδοχικά αυτή την περίοδο την Ιορδανία στις 9 Σεπτεμβρίου και το Ομάν στις 28 του ίδιου μήνα καθώς και την Ρουμανία τον Οκτώβριο. Οι επισκέψεις αυτές συνδέονται με την προετοιμασία της Λευκωσίας να βρει εν δυνάμει αγοραστές του φυσικού της αερίου. Σημειώνεται πως Αίγυπτος και Ιορδανία προγραμματίζουν κατασκευή τερματικών αποϋγροποίησης φυσικού αερίου, εξέλιξη που ενδιαφέρει την Κύπρο.

Πεδίο επαφών και σε Ν. Υόρκη

Ο Πρόεδρος Αναστασιάδης αναμένεται το Σεπτέμβριο στη Νέα Υόρκη, στο περιθώριο της συνόδου της Γενικής Συνέλευσης των Ηνωμένων Εθνών, να συναντηθεί με τον Αιγύπτιο ομόλογό του, μετά από αίτημα του δεύτερου. Ο Κύπριος Πρόεδρος είχε, ως γνωστό προσκληθεί και στην τελετή ανάληψης των καθηκόντων του Αιγύπτιου Προέδρου, Άμπντελ Φάταχ αλ Σίσι ενώ οι δυο κυβερνήσεις διατηρούν κανάλια επικοινωνίας. Την ίδια ώρα, όπως ανακοίνωσε ο υπουργός Εξωτερικών, Ιωάννης Κασουλίδης, στη Νέα Υόρκη θα πραγματοποιηθεί τριμερής συνάντηση των ΥΠΕΞ Κύπρου, Ελλάδος, Αιγύπτου, στα πλαίσια της συνεργασίας που έχουν εγκαινιάσει τον περασμένο χρόνο.Ψηλά στην ατζέντα οι εξελίξεις στην περιοχή αλλά και τα ενεργειακά. Θα προηγηθούν τα ταξίδια του Γιώργου Λακκοτρύπη σε μια σειρά χωρών, που θα ενισχύσουν και προετοιμάσουν και τις επαφές στη Νέα Υόρκη.

Κυπριακό: Στάση αναμονής και παράλληλες κινήσεις

ΟΙ εξελίξεις στην Τουρκία, μετά τις προεδρικές εκλογές της περασμένης Κυριακής και η νίκη του Ρετζέπ Ταγίπ Ερντογάν, επιβάλλουν στους εν δυνάμει μεσολαβητές στο Κυπριακό να τηρήσουν στάση αναμονής. Κυρίως γιατί θα πρέπει να αναμένουν να δείξει τις προθέσεις και διαθέσεις του ο κ. Ερντογάν.

Η Τουρκία εισέρχεται σε μια νέα περίοδο εσωστρέφειας ενδεχομένως και παρατεταμένης προεκλογικής περιόδου ενώ οι εξελίξεις στην περιοχή την επηρεάζουν σημαντικά( Ιράκ, Συρία κλπ). Την ίδια ώρα η διαδικασία των διαπραγματεύσεων στο Κυπριακό δεν προχωρά, παρά τις προσπάθειες των εν δυνάμει μεσολαβητών να σπρώξουν τις συζητήσεις προς τα εμπρός. Με βάση τα δεδομένα που διαμορφώνονται οι συζητήσεις έχουν «κολλήσει» στην έλλειψη μεθοδολογίας. Το πώς θα προχωρήσει η διαδικασία θα διαφανεί από τις κινήσεις των Ηνωμένων Εθνών και των Αμερικανών το Σεπτέμβριο, που θα έχουν την προσοχή τους στραμμένη στην Άγκυρα.

Για τη Λευκωσία, το σκηνικό ενδεχομένως να είναι ευνοϊκό, φτάνει ανεξαρτήτως των όποιων κινήσεων στο πεδίο των διαπραγματεύσεων για το Κυπριακό, να προχωρήσει σε εφαρμογή όλων των σχεδιασμών που έχει στα θέματα της ενέργειας. Η λαθροβίωση του διαλόγου αποτελεί επιλογή της Άγκυρας, που επιβάλλει την τακτική αυτή στο δίδυμο Έρογλου και Οζερσάι. Η τουρκική αυτή τακτική θα λειτουργήσει σε βάρος της, εάν η Λευκωσία κινηθεί παράλληλα στο πεδίο των υδρογονανθράκων.

Link to source: http://mignatiou.com/2014/08/kodikos-idrogonanthrakes-se-drasi/

The new state of play as Cyprus preps for more gas drills | Cyprus Mail

The new state of play as Cyprus preps for more gas drills
By Constantinos Hadjistassou
IT’S BEEN TWO and a half years since the official announcement of the discovery of natural gas in offshore Block 12, and a great deal has changed here in Cyprus, in the region and also in the global natural gas market. No doubt expectations ahead of the second cycle of prospecting within Cyprus’ Exclusive Economic Zone (EEZ) are cause for excitement. The next two years will be key to the energy (and economic) future of Cyprus and of other countries.
During this time no major hydrocarbons prospecting – aimed at increasing countries’ indigenous reserves – is expected in Europe, with the exception of the United Kingdom and Poland. Cyprus can therefore potentially play a part in boosting EU energy security through the discovery of major natural gas quantities, of the scope of 50 to 60 trillion cubic feet (tcf). The recent interest displayed by Deutsche Bank and by China’s CNOOC in a mooted Cypriot liquefaction terminal also opens up new exciting opportunities for implementing infrastructures and seeking buyers.
What developments have taken place in the space since late 2011 that are relevant to future energy planning?
Whereas initial estimates spoke of an average of 7 tcf in Block 12, the latest prevailing estimate of 3.6 tcf has upset export designs, rendering a land-based liquefaction terminal unprofitable – at least for the time being. The rising costs of building and operating liquefaction terminals have in turn led to an increase in the export capacity of LNG trains. With the exception of Qatar, the capacity of the latest trains is around 5.5 million tonnes of LNG per annum.
The expanded capacity of LNG trains has led to an increase in the amount of natural gas reserves needed to justify such mammoth investments.
Another significant and more recent development has been the construction of the world’s first floating LNG (FLNG) facility. Though the facility is still not complete, it has nonetheless paved the way for tapping into more stranded gas and for allowing this technology to take root. At the moment, water-based LNG operations are perhaps the only profitable choice for exporting natural gas from the ‘Aphrodite’ field. That is, unless some form of partnership is struck with Israel for jointly developing a land-based terminal, but this is a remote possibility for the time being.
The Ukraine-Russia conflict is another development with major ramifications. The Ukraine crisis has come to be tied to Cyprus, in the context of boosting the EU’s energy security by supplying the EU with Cypriot natural gas, thus diversifying the bloc’s energy supplies. This is a policy strongly backed by the United States, which is seeking alternative sources of natural gas as a counterbalance to Russian gas, not just for the EU but for the region in general.
In this context the comments made by Amos Hochstein, who heads up the Bureau of Energy Resources at the US State Department, are of particular significance. In a first, Hochstein decoupled the Cyprus problem from the development of Cyprus’ energy resources.
Meanwhile Israel has approved exports of up to 40 per cent of its natural gas reserves, giving concession holders there the green light to seek export routes. The most important preliminary deal with BG, involving the channelling of some 3.6 tcf from Leviathan to BG’s LNG terminal in Idku, Egypt, creates a whole new state of affairs where Cyprus is concerned. It’s now clear that the same companies active in Cyprus are opting for the most cost-beneficial, least time-consuming, and politically acceptable solutions. Israeli natural gas is to be exported to Egypt via subsea pipelines. But despite Egypt’s huge demand for natural gas, the methane will not be sold on the local market for the time being.
In practical terms, should this agreement be seen through, the companies would secure their interests, but it would strip Cyprus of an option. It’s worth clarifying that any business or commercial action by the companies is jointly decided with the sponsor state. From a commercial standpoint, the companies operate from a position of strength and usually take the lead in business ventures.
Moreover, on a political level, the option of exporting natural gas through Turkey has been definitively rejected over the past two and a half years. This approach restricts Cyprus’ bargaining scope in the peace talks by ruling out the transport of natural gas to the Turkish market and then onto the EU via Turkey. Despite the transit risks, natural gas pipelines are still one of the most cost-beneficial options as far as liquefaction is concerned, and thus it is not wise to rule out this option.
Another important development, in the wake of the appraisal drilling at ‘Aphrodite’, is Egypt’s conversion from a net exporter to a net importer of natural gas, despite the fact that the country has 65 tcf of proven reserves. Considering the longstanding good relations between Cyprus and Egypt, Egypt is a potentially significant trade partner that can absorb major quantities of Cypriot natural gas, provided that payments are guaranteed.
In the interim, recoverable natural gas exceeding 100 tcf has been discovered offshore Mozambique and Tanzania. And some of the companies involved in prospecting there are the same ones operating in Cyprus.
With the land-based LNG terminal now pushed back to the year 2024 (or even later) from 2022 initially, Cypriot gas will likely face increased competition in global markets, particularly in Asia. It is estimated that by 2018 Australia may overtake Qatar as the largest exporter of LNG in the world. Due to its proximity to the LNG markets of China, Japan, India and South Korea, Australia has an advantage given the comparatively lower transport costs to these markets. Increased production of shale gas, coupled with the LNG export prospects of the United States and Canada, are expected to drive down LNG prices, particularly in the Asian and EU markets. Yet even if the timing is not on our side, the possibility of oil discoveries offshore Cyprus is something else to look forward to.
Constantinos Hadjistassou is a lecturer at the University of Nicosia and a researcher with the KIOS Centre, University of Cyprus.


Link to source: http://cyprus-mail.com/2014/08/17/the-new-state-of-play-as-cyprus-preps-for-more-gas-drills/

Στα άδυτα του τερματικού της VTTV | In Business

Published on Aug 17, 2014 - Η κάμερα του IN Business βρέθηκε στο μεγαλεπήβολο έργο της VTTV στο Βασιλικό καταγράφοντας εντυπωσιακές εικόνες από το project.



Link to source: https://www.youtube.com/watch?v=iE5dtwQfRsg