Friday, August 14, 2015

Cyprus waits for Noble-Delek export deal to take shape | Cyprus Mail


Cyprus waits for Noble-Delek export deal to take shape


Cyprus waits for Noble-Delek export deal to take shape
TOO many unknowns make it hard to predict how Cyprus’ gas plans are affected by the deal announced on Thursday between Israel and Noble-Delek for the development of the Leviathan field.
For one thing, the Israeli cabinet still has to ratify the deal on Sunday, and the country’s finance ministry has been pressing for more concessions from the gas companies. And even if that hurdle is overcome, the agreement must get the nod from the Knesset.
Assuming it all pans out, Noble and Delek will immediately get to work exploring the development of the massive Leviathan gas field. Under the deal announced by Prime Minister Benjamin Netanyahu, the Leviathan partners have committed to invest $1.5bn over the next two years.
But, as gas expert Charles Ellinas told the Cyprus Mail, in order for Noble to pour serious cash into the project they would first need to line up export markets, as Israel alone cannot absorb all of the Leviathan gas.
For Noble, the main options are three. First a pipeline to Egypt, where the gas would be re-liquefied (to LNG) and re-exported to Europe; a pipeline to Turkey, and then possibly onto Europe; and third, combining the resources of Leviathan and Cyprus’ Aphrodite fields via an LNG plant here, for export to Europe.
But things get tricky, since Noble would need to drop the sale price to Egypt substantially, if BG in Egypt is to agree to buy the Leviathan gas and then re-export it to Europe at a competitive price, as LNG.
That in turn would mean Noble having to drop their domestic rates (in Israel) further, because it’s understood that under the new deal they have committed to selling outside (for example, to Egypt) at prices lower than inside Israel.
In Israel, Noble’s gas goes for around $5.5 per million BTU. Should this be slashed by another dollar, say $4.5 per million BTU, and then the cost of the Leviathan gas to Egypt lowered further, Noble might not have an incentive to sell.
At the same time, said Ellinas, BG in Egypt is seeking the lowest possible rate for the imported Israeli gas, since it’s currently re-exporting gas to Europe for around $7 to $8, which includes the cost of liquefaction (in Egypt) and re-gasification (in Europe).
Cyprus faces a similar conundrum. Recently EGAS Chairman Khalid Abdul-Badi said that the cost of importing Cypriot gas would not exceed $6.
According to Ellinas, that is problematic, because it suggests the cost of the gas at the Aphrodite platform would be around $4 – again, too low for Noble’s liking.
Noble reps have in the past indicated that their target price for Cypriot gas is around the $6 range.
Numbers and margins aside, geopolitics is likely to play a role. Shell – which has acquired BG – is reportedly committing to investing in Iran, complicating, or perhaps entirely ruling out, any possible collaboration with Israel.
Intriguingly, the best option for Israel rests with a possible solution of the Cyprus problem. That could pave the way for joint Israeli and Cypriot gas exports to Turkey, since the export routes are the same, through the island’s Exclusive Economic Zone.
And, says Ellinas, not only does a Cyprus deal now seem a real possibility, but also not that far off either, if media reports are to be believed about some kind of announcement by year’s end.
Such a development might allow both Israel and Cyprus to get their ducks in a row. For both countries, piping to Turkey is the easiest, cheapest way of monetising of the gas.
If not, then an LNG facility based in Cyprus – pooling gas from Aphrodite and Leviathan – might come back into play, Ellinas suggests. A decision around 2017 would allow for actual exports to Europe to commence by 2022.
The bottom line, the expert said, is that the situation with east Med gas is more fluid now than it was a few months ago.

Source: http://cyprus-mail.com/2015/08/14/cyprus-waits-for-noble-delek-export-deal-to-take-shape/

Thursday, August 13, 2015

UPDATE 1-Israel reaches deal to develop Leviathan gas field | Reuters - CNBC

UPDATE 1-Israel reaches deal to develop Leviathan gas field







JERUSALEM, Aug 13 (Reuters) - Israel's government said on Thursday it had reached a deal with a U.S.-Israeli consortium on the development of the huge Leviathan gas field and two other offshore wells.
After weeks of talks over the government's initial proposal in June, the controversial deal will allow Texas-based Noble Energy and Israel's Delek Group to keep ownership of the largest offshore field, Leviathan. They are required to sell off other assets, including stakes in another large deposit called Tamar.
"The outline will bring Israel hundreds of billions of shekels in the coming years," Prime Minister Benjamin Netanyahu told a news conference, saying he will present the agreement to the cabinet on Sunday for a vote.
The deal sent Israel's energy and oil and gas stocks up 5 to 6 percent by afternoon trading in Tel Aviv.
One change to the initial plan is that the price of gas in the new agreements will be lower, while the developers will also commit to invest $1.5 billion in developing Leviathan in the next two years.
Netanyahu had been adamant in seeking a deal that would allow Leviathan - one of the world's largest offshore discoveries of the past decade - to be developed. He had faced a coalition crisis over details of the plan on grounds that the government gave into most of the companies' demands and leave Noble and Delek with too much power since they would control most of Israel's gas reserves.
Government officials argued the current deal was the best they could achieve in ensuring there were no further delays in developing the gas field that sits 80 miles (130 km) off Israel's Mediterranean coast.
Netanyahu earlier this week won crucial backing from the central bank chief Karnit Flug, who said that while the deal was far from ideal it was the right move for the economy.
Leviathan, with estimated reserves of 22 trillion cubic feet (tcf) or 622 billion cubic metres, is slated to begin production in 2018 or 2019 and expected to supply billions of dollars of gas to Egypt and Jordan in addition to supplying Israel.
Energy Minister Yuval Steinitz said that years of delays of developing Leviathan, discovered in 2010, has cost Israel tens of billions of shekels.
Israel, which has gone from an energy dependence to a potential exporter, currently receives its gas for electricity generation from Tamar, which began production in 2013.
"More gas and oil discoveries await us," said Steinitz, who urged more foreign firms to invest in Israel. "There is no certainty on this matter, but there is a reasonable chance that further discoveries are waiting to be made."
(Additional reporting by Dan Williams; Editing by Jeffrey Heller and David Evans)


Source: http://www.cnbc.com/2015/08/13/reuters-america-update-1-israel-reaches-deal-to-develop-leviathan-gas-field.html

Tuesday, August 11, 2015

Saipem 10000 resumes drilling off Cyprus | in-cyprus.com (Cyprus Weekly)

Saipem 10000 resumes drilling off Cyprus

The Saipem 10000 drillship sailed through Cypriot waters on Tuesday where it is set to resume drilling operations on behalf of ENI in Egypt. Namely ENI’s drillship will be operating in block 8 of Egypt’s EEZ, which neighbours block 11 of Cyprus’ EEZ.
Should the vessel have a successful strike, then it will only be 2.5 nautical miles off Cyprus’ zone and 75 nautical miles south east of the Amathousa Well and south of the Eratosthenis underwater mountain range.
Saipem 10000 is back and full operational having previously been through maintenance works after two operations on behalf of ENI in Cyprus’ EEZ.
ENI last year signed Exploration and Production Sharing Contracts with Cyprus, for Blocks 2, 3 and 9 located in the Cypriot deep offshore portion of the Levantine basin, which encompass an area of around 12,530 square kilometres, thus marking the entry of ENI in the country.
ENI was awarded the three blocks whilst leading a consortium formed by ENI (80%, as operator) and the Korean company Kogas (20%) in an international competitive tender (Cyprus Second Offshore Licensing Round) which was completed in May 2012.
Exploration rights for blocks 9 and 11 – which fall under the EEZ of Egypt – fall exclusively under the umbrella of ENI while the Cypriot slice of block 11 belongs to the ENI/KOGAS consortium. Eni holds an 80 percent stake in the block 9 and KOGAS holds a 20 percent stake.
The rights for the Egyptian block 8 – which neighbour Cyprus’ block 11 – belong to the consortium of ENI and BP.
France’s Total failed to find any hydrocarbons at its offshore Cyprus block in January but said it would move forward with further exploration efforts.

Source: http://in-cyprus.com/saipem-1000-resumes-drilling-off-cyprus/