Saturday, September 12, 2015

Zohr: The sequel - IN CYPRUS / CYPRUS WEEKLY

12/09/2015Charles Ellinas

The discovery of the supergiant gas-field Zohr in Egypt by ENI sparked a lot of interest, much press coverage and introspection here in Cyprus.

Where should Cyprus go to from here in the quest to develop and benefit from its hydrocarbon resources.

What this discovery reinforced is the knowledge that the East Med, with Cyprus at the center of it, has substantial hydrocarbon resource potential, still to be discovered.


A lot of the publicity surrounding the Zohr discovery concentrated on this and played up the potential for Cyprus and no doubt over the next few weeks this may be hyped even more.

It may be hoped that the euphoria created by the promise of future riches from potentially vast quantities of hydrocarbons will lessen any potential disappointment from the plan to sell gas to Egypt.

That Cyprus potentially has substantial quantities of hydrocarbons is well known, starting from the PGS seismic investigations to the 2010 USGS study and findings.

It is hoped that Total’s further study of the data in and around Block 11, expected to be submitted soon, will add to this knowledge and provide further support to this contention.

However, we need to tread with caution, avoiding building expectations, until discoveries are actually made.

The hype that preceded ENI’s and Total’s exploration of Blocks 2, 3, 9, 10 and 11 should be a lesson. There were high hopes that some of these blocks, and especially Block 9, may hold vast quantities of gas only to be thwarted by drilling.

ENI’s negative results in Block 9 were a rude awakening and a reminder that in oil and gas no matter how good indications are nothing exists until you actually find it by drilling.

And it is only by doing more drilling that new discoveries can be confirmed. At this stage and for the foreseeable future all drilling activity in Cyprus’ EEZ has stopped and there are some question marks about its future resumption. Hopefully Total’s report next month on its re-evaluation of exploration data will spurn them to stay and continue with a drilling programme – but will it? As far as ENI is concerned, despite its stated strategy to concentrate its future activities in mature hydrocarbon provinces, such as Egypt and Mozambique, it is hoped that it will resume drilling in Blocks 2 and 3 and perhaps go back to 9, but it remains to be seen. Yesterday ENI’s CEO Claudio Descalzi confirmed to President Anastasiades the interest of ENI in Cyprus. Noble still has an obligation to drill at least one more well in Block 12 – but this has been delayed.

However, with less than half of the declared blocks in Cyprus EEZ leased there is room for more drilling. The discovery of Zohr has created renewed interest in the region. The areas around and west of mount Eratosthenes always showed good prospects. Even though this is an area disputed by Turkey, now is the time to think about a third licensing round.

This needs careful preparation given the negative results by Total and ENI so far and the low oil price, but may have a lot going for it given the two major discoveries in the region: Zohr and Leviathan. Timing is also critical. Right now companies are cutting on spending as a result of the oil price crisis. And there are the ongoing Cyprus problem negotiations which should not be disturbed and must be given priority. With careful preparation now the road-show could be aimed to take place towards the end of 2016 or early 2017.

Re-focus export options

Should Aphrodite gas exports to Egypt not materialise, which now looks to be more and more likely, Noble and Cyprus need to reconsider their options. The more immediate choices are marine CNG and Floating LNG. Both are included in Noble’s Development Plan. Marine CNG can be implemented faster and investment by Noble only involves a floating, FPSO, platform and subsea completion, as the CNG ships will be funded by the shipper. FLNG is more capital intensive and will take longer to implement. As no preparation has been done for either option, the key issue is to determine commercial feasibility which depends on project costs, remembering that Aphrodite lies in deep water and therefore more expensive to develop, markets and gas prices. The latter may prove to be a challenge given the depressed global oil and gas prices.

Israel is in a similar situation given their regulatory problems and the likely loss of the Egyptian market. Israel’s export choices are more limited and include potential exports to Turkey and Europe via a pipeline through Cyprus’ EEZ or return to the option of an LNG plant in Cyprus.

Cyprus can benefit by cooperating with Israel and encouraging Noble and Delek to put both of these options back onto the table for more detailed investigations. Both have their advantages and disadvantages, but will take longer to implement than CNG or FLNG.

Market considerations


In considering the above, it should be noted that global hydrocarbon markets evolve continuously and opportunities available now may not be there later. The world has experienced major market upheavals very vividly since the discovery of Aphrodite in 2011.

With the likely loss of the Egyptian market, the next nearest markets are in Turkey and southeast/central Europe. However, many competing gas, mostly pipeline, projects are now under consideration, materialisation of which will influence future availability of this market. These include:
  • The Southern Corridor, with Azerbaijani gas through Turkey to Europe 
  • Turk-Stream, with Russian gas to Turkey and possibly Europe 
  • Iran gas to Europe through Turkey 
  • The Trans-Caspian gas pipeline joining the Southern Corridor 
  • Kurdistan gas to Turkey 
And there is also Nord-Stream-2 which is destined to supply central Europe. Obviously not all of these projects will go ahead, but a few will and once they are implemented they may saturate the European gas market.

All these projects are being considered at a time when gas utilisation in Europe is actually declining, being displaced by renewables.

The longer it takes for East Med projects to get off the ground and secure a slice of this gas market the more the risk that when eventually they are ready it may be too late.

That will then leave markets further afield, such as Asian gas markets. The only way to reach these is by LNG. But there are also timing and cost risks and strong competition from North America, Australia, Russia, East Africa, Qatar, Iran.

And on top of this gas demand in China is declining as it adjusts away from a manufacturing/export driven market.

If Cyprus and Israel miss the opportunities they have to develop and export their gas it may take another ten years at least before demand outstrips supply and such opportunities re-appear. They need to act now.

Charles Ellinas is a hydrocarbons business consultant

SOURCE

Friday, September 11, 2015

Total request a meeting with Lakkotrypis | SigmaLive

Total request a meeting with Lakkotrypis

 
The French giant Total natural gas requests a meeting as soon as possible with Energy Minister Giorgos Lakkotrypis following Eni's discovery of a natural gas field offshore Egypt. 

The French colossus which owns block 11 in the Cypriot EEZ is only 3 nautical miles far from Egupt’s Zohr gas field.
 
Total completed last April geophysical and geochemical surveys on block 11 and is expected to announce the results and deliver them to Cyprus in mid-October.

Source: http://www.sigmalive.com/en/news/energy/135047/total-request-a-meeting-with-lakkotrypis

U.S. energy envoy sees bright spot for natgas in Middle East | Reuters

Business News Fri Sep 11, 2015 1:35am IST

U.S. energy envoy sees bright spot for natgas in Middle East



Signs of hope are scarce in the Middle East, a region awash in violence, civilians fleeing crumbling states, and economies built largely on oil squeezed by a dive in global prices.
But Amos Hochstein, the U.S. energy envoy, sees some long-term potential for natural gas development to help provide economic security from Iraq to the eastern Mediterranean.
Low crude prices have hit particularly hard in Iraq, where the central government in Baghdad and the semi-autonomous Kurdistan Regional Government (KRG) are locked in a spat over oil revenues. The row threatens to reduce Iraq's ability to organise the fight against Islamic State militants.
But Hochstein, in an interview at the State Department, was optimistic on the long-term energy prospects of natural gas.
"There's a lot of potential for gas in the KRG. Why shouldn't we see Kurdistan as delivering significant amounts of gas via Turkey into Europe?" Hochstein, the State Department's special envoy for international energy affairs, said late last week.
The European Union is looking to diversify its natural gas sources. The EU now depends on Russia for one third of its gas, about half of it shipped through Ukraine where Russia is seen to be stoking a civil conflict.
Iraq also needs reliable and affordable sources of power, though it first needs to build more power plants.
Meanwhile the United States is trying to work with both Baghdad and KRG on sharing oil revenues, he said.
"It's limping along," he said about the relationship between the two.
Hochstein said last month's mammoth find in Egyptian waters of the Zohr offshore natural gas field by Italy's Eni (ENI.MI), the largest in the Mediterranean, was good news for the region. Some analysts contend the Egyptian find poses a challenge to plans by Israel and Cyprus to export their own natural gas from recently discovered fields..
Hochstein disagreed, saying the find shows that under the right conditions, countries such as Lebanon, Israel and Cyprus can uncover greater energy reserves.
"What this confirms is that recent discoveries ... are not accidental, but that this is an under explored basin that could yield many more fields," he said. "All that needs to happen is to put in place the right regulatory environment and investment climate."
Hochstein wants the Israeli government to approve a framework that would encourage companies to drill there, though he had no prescriptions for how to do that.
U.S. WILL NEVER BE ENERGY INDEPENDENT
Despite the domestic drilling boom that has made the United States one of the world's top oil producers, the country will remain engaged in the Middle East, Hochstein said.
Even if the United States was able to produce enough oil to reduce its imports to zero, domestic oil prices will always fluctuate with the global crude price.
"The fact that we are living through revolutionary times in U.S. energy does not mean we can ever be energy independent," Hochstein said. Oil is still an international commodity, and global supplies influence domestic prices, he said.
In previous years, Hochstein worked with countries to accept sanctions on Iran's oil exports, measures that many say helped push Tehran to agree to this year's nuclear deal.
U.S. companies are banned from investing in Iran as sanctions have not been lifted. But Hochstein was confident they will return down the road. "Will contacts be signed at some point? Yes. I fully expect there will be activity in the energy sector."
(Reporting by Timothy Gardner, editing by Bruce Wallace and David Gregorio)

Source: http://in.reuters.com/article/2015/09/10/usa-energy-envoy-idINKCN0RA2IT20150910

Thursday, September 10, 2015

The President of Cyprus Nicos Anastasiades meets Eni's CEO, Claudio Descalzi | ENI

The President of the Republic of Cyprus, Nicos Anastasiades, and Eni’s  Chief Executive Officer, Claudio Descalzi10/09/2015, CET 11:30

The President of Cyprus Nicos Anastasiades meets Eni's CEO, Claudio Descalzi


Eni believes in the significant synergies of joint development in the entire area of the eastern Mediterranean

Nicosia, September 10, 2015 - The President of the Republic of Cyprus, Nicos Anastasiades, and Eni’s  Chief Executive Officer, Claudio Descalzi, met today in Nicosia to discuss Eni's current activities in the country and the potential for future projects.
Descalzi briefed President Anastasiades on the latest developments of hydrocarbon exploration activities in the Mediterranean Basin and stated that Eni remains committed to Cyprus and the eastern Mediterranean and will continue to work with the Government of the Republic of Cyprus to develop the Country's energy potential.

Among the topics discussed during the meeting were the evolution of the energy and geopolitical scenarios that the gas discovery made off Egypt will bring throughout the area and the role that Cyprus, due to its energy potential, will play in the near future.
Eni believes in the significant synergies of joint development in the entire area of the eastern Mediterranean. This area could be of crucial strategic importance as a gas hub for the whole region and also makes an important contribution to European energy security.

Company Contacts:
Press OfficeTel. +39.0252031875 – +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821

ufficio.stampa@eni.com 
segreteriasocietaria.azionisti@eni.com 
investor.relations@eni.com
Web site: www.eni.com

Source: http://www.eni.com/en_IT/media/press-releases/2015/09/President_Cyprus_Nicos_Anastasiades_meets_Eni_CEO_Claudio_Descalzi.shtml

Cyprus gas could reach Europe through Egypt facilities | PennEnergy

Cyprus gas could reach Europe through Egypt facilities

The head of Italian energy producer Eni says gas found in waters off Cyprus could be transported to European markets through the company's processing facilities in Egypt.
Copyright 2015, The Associated Press
NICOSIA, Cyprus (AP) — The head of Italian energy producer Eni says gas found offshore in waters off Cyprus could be transported to European markets through the company's processing facilities in Egypt.
CEO Claudio Descalzi said after talks with Cyprus President Nicos Anastasiades Thursday that there's an "opportunity" to process Cypriot gas at the company's Damietta facility in Egypt for export to Europe.
Eni last month announced a discovery in the Egyptian offshore that it called the "largest-ever" ever made in the Mediterranean Sea. The company is also licensed to search for gas in three areas off Cyprus.
Descalzi said Eni SpA is committed to continuing exploration off Cyprus after some unsuccessful drilling attempts this year.
Cyprus has one proven deposit that's estimated to contain more than 4 trillion cubic feet of gas.

Source: http://www.pennenergy.com/articles/pennenergy/2015/09/offshore-oil-and-gas-news-cyprus-gas-could-reach-europe-through-egypt-facilities.html

ENI commits to further investments | in-cyprus.com (Cyprus Weekly)

ENI commits to further investments 

There are possible synergies between Cyprus, Egypt and ENI, ENI CEO Claudio Descalzi said after his meeting with President Nicos Anastasiades, held Thursday morning at the Presidential Palace in the presence of Energy Minister George Lakkotrypis.
Mr Descalzi reaffirmed the commitment of the Italian giant to pursue activities in Cyprus and proceed with additional investments. He also said the company is currently reassessing data and the geological model for plots 2, 3 and 9 in which ENI operates.
“The President had an excellent meeting with ENI Executive Director and colleagues”, said government spokesman Nicos Christodoulides.
Speaking to reporters after the meeting, Christodoulides said Descalzi’s statements speak for themselves.
“On behalf of the government”, Christoulides added, “I just want to say that we will in all seriousness and with full responsibility, proceed on the basis of concrete strategic planning”.

Source: http://in-cyprus.com/eni-commits-to-further-investments/

Eni’s Egypt Gas Find Further Scrambles LNG Market’s Future | Oilpro

Eni’s Egypt Gas Find Further Scrambles LNG Market’s Future

Allen Brooks, 10 September 2015, OilPro
Last week we were treated to a headline that Italian oil company Eni SpA has made a huge natural gas find off the coast of Egypt and will move quickly to delineate and develop the field. The field, located in the Mediterranean Sea at the company’s Zohr prospect about 120 miles off the Egyptian coast in the Shorouk block, is estimated to contain potentially 30 trillion cubic feet of natural gas, or 5.5 billion barrels of oil equivalent. Eni called the field a “supergiant” gas field and claimed that it “could become one of the world’s largest natural-gas finds.” Eni expects to make a final investment decision about developing the field later this year, setting up development drilling in 2016 and 2017 with initial production on stream by 2018. This fast track is helped by the field’s location allowing it to access neighboring production infrastructure.
Claudio Descalzi, chief executive of Eni, discussed the results of the drilling with Egyptian president Abel Fattah Al-Sisi on Cairo a little over a week ago. Following the meeting, Mr. Descalzi said, “It’s an exciting moment for us and also for Egypt. This historic discovery will be able to transform the energy scenario of Egypt.” How might that be?
The Zohr discovery in located in a block that covers an area of 100 square kilometers (38.6 square miles) and is in 1,450 meters (4,800 feet) of water depth. Mr. Descalzi told the Financial Times that he believes the field could contain as much as 40 Tcf of gas and oil that could be found with additional exploration. Since Eni controls the block 100%, it is likely that further exploration will be conducted given this recent discovery. He told the Financial Times that “Egypt can rely on this discovery for the next decade. They have found a very important supply for the future.”
enter image description here
Egypt’s gas output has been declining since 2011 as the revolution that ended Hosni Mubarak’s regime curtailed investments in exploration and production. With electricity demand, mostly generated by natural gas, growing by more than 7% a year, the most populous Arab country with 87 million people began buying liquefied natural gas (LNG) to meet domestic needs.
Before the revolution, Egypt shipped natural gas to Jordan and Israel by pipeline and processed LNG at plants in Idku and Damietta for sale overseas. According to the Energy Information Administration (EIA), Egypt is the second largest natural gas producer in Africa after Algeria.
In response to the declining natural gas output and growing gas demand, Egypt had been considering building a pipeline to a field off Cyprus as well as securing supplies from the giant Leviathan field offshore Israel. Both of these potential deals are suddenly being reviewed in light of the Zohr discovery, which will change energy development in this region of the Mediterranean Sea. The Egyptian government suggests the discovery will not upend those private company deals.
The Leviathan field is estimated to contain 22 Tcf of natural gas, putting it in the giant category, but the plan to use idled Egyptian LNG facilities owned by BG Group (BG-NYSE) to export LNG will need to be reassessed. The investors in the Leviathan field recently agreed to supply gas to Jordan, but that was expected to use the existing pipeline from Egypt. That deal may be subject to review given the potential for Egypt to be able to continue to supply Jordan from this new field. The Zohr discovery announcement came at the same time the Israeli Knesset was scheduled to debate the cabinet’s decision to allow the Leviathan development to move forward. Members of the opposition party in the Knesset believe that the Leviathan deal is too lucrative for the investors and results in gas prices that are too high for Israeli consumers. A rejection of the Leviathan deal could force the owners of the field to reconsider its development, which has been delayed since its discovery in 2010, and pressure the Israeli government to strive for an agreement with more favorable prices for consumers.
The interesting scenario to consider is what the Zohr discovery, coupled with the Cyprus and Israeli discoveries and the possibility that Egypt’s economy might recover to the point that it can support more domestic exploration and development means for future gas discoveries? Could this corner of the world become a new source of global natural gas supply? If so, what might that mean down the road for the LNG market, which has been going through its own recalibration? These questions sent us to re-examine the current state of the LNG market.
In our review, we went back and re-read some reports about the LNG market and its expectations from earlier periods, along with looking at the state of the current market. A 2006 report on LNG by the Oil & Gas Journal was focused on the amount of LNG that would be flowing into the U.S. and where that supply would come from. However, a report we found most relevant for contrasting today’s situation was produced in November 2011 by Neil Beveridge of Bernstein Research. His report contained a chart on Japanese LNG prices compared to Henry Hub natural gas prices from late summer 1999 to 2011.
Japanese LNG import prices started at around $3 per million British thermal units (mmbtu) in 1999 but quickly rose to above $4/mmbtu in 2000 and stayed in the $4-$6/mmbtu range until 2005 when they began trading in the $6-$8/mmbtu range until 2008 at which point they soared, along with global crude oil prices, since LNG was priced off indices that were tied to oil prices. The Great Recession ended the rise in LNG prices near the $15/mmbtu level, sending them back into the $6-$8/mmbtu range. The low price didn’t last long as LNG prices followed global oil prices higher reaching the $17/mmbtu level by late summer 2011.
enter image description here
The most interesting aspect of this chart is that following the Great Recession, while Japan’s LNG import price was climbing back to new highs, U.S. natural gas prices were falling due to the shale gas revolution’s success. What this produced was a scenario that Mr. Beveridge described thusly: “Over the last 12 months, however, the divergence in global gas prices has taken the differential between US and LNG prices to levels not seen before. With Henry Hub trading at less than $4/mscf and LNG contract prices reaching over $16/mscf in Japan, we are seeing a difference in price of over $12/mscf which is equivalent to an oil equivalent price of US$7/bbl. Given it costs less than $1/mscf to ship gas from Canada to Japan and less than $3/mscf to ship gas from the US Gulf Coast to Asia, this differential is not sustainable if market forces are allowed to operate.”
Despite that view of the unsustainability of the differential between Japan’s LNG import prices and U.S. Henry Hub gas prices, this spread lasted until late in 2014. In late 2014, global oil prices collapsed under pressure from OPEC’s decision to continue pumping large oil volumes despite a growing global oil glut. These lower oil prices pulled down LNG prices linked to oil. In Exhibit 9 on the next page, we show the monthly contract and spot LNG prices for import into Japan between March 2014 and July 2015, as reported by METI. The zero monthly prices in the chart reflect months when METI did not report a price. While LNG import prices remained very high early in 2014, they slid into the summer before jumping back up but then began dropping rapidly to below $8/mmbtu by early 2015, where they remain today.
enter image description here
While the high LNG price in northern Asia – Japan and Korea – has fallen dramatically in recent months, landed LNG prices globally have also declined as global oil prices have fallen. These price declines, as highlighted by the chart in Exhibit 10, have erased much of the arbitrage advantage owners of new LNG terminals were hoping to capture when they filed for permits to build, or actually began construction of new LNG export terminals.
enter image description here
The Bernstein report contained a chart showing LNG terminals in existence, under construction and planned globally as of late 2011. The chart actually understates the number of LNG export terminals in the United States.
enter image description here
One area of concentration is Australia where huge offshore gas reserves and gas from coal fields are feeding into new LNG export terminals that when all are completed will position the country as the world’s largest gas exporter, surpassing Qatar. Virtually all of this gas has been targeting Asian markets, but with the slowing economies there and now the resumption of nuclear power plants in Japan, that may be smaller than previously anticipated. A report from consultant EY shows projected global LNG demand beginning in 2012 through 2030. While the demand from Japan and Korea was projected to grow, it rose very slowly. The more dramatic growth was projected to come from other Asian countries including China. Since this forecast, China and Russia have agreed to a deal to ship Siberian natural gas into the Chinese pipeline system reducing the need for China to buy as much LNG as originally planned.
enter image description here
Even with the projected demand growth, the EY report shows that the planned construction of LNG export terminals globally would exceed demand beginning as early as 2015 but certainly by the end of the forecast period in 2025. At that point, all the speculative liquefaction capacity as of 2011 would be surplus for meeting the world’s gas needs.
enter image description here
Given this picture of LNG supply and demand, one has to wonder what impact Eni’s recent natural gas discovery off the coast of Egypt may have on the market. As more natural gas supplies around the world become available and the technology to produce smaller natural gas deposits with movable liquefaction plants improves, it is difficult to see how LNG prices return to the lofty levels experienced in northern Asia in recent years. Yes, LNG prices are likely to go higher over time, especially if the oil-linked pricing contracts remain in place and crude oil prices climb higher, but the rise is more likely to be tied to customer desires to lock up new large gas supplies at what are seen as reasonably attractive long-term levels, even if they are above spot market prices. In the same vein, it is highly likely we will see further development of a global natural gas spot market, something that has been largely restricted by the nature of the capital intensity of LNG liquefaction and regasification facilities and the ships necessary to move the gas from producing to consuming locations. All of these shifts will make the future LNG market more dynamic, but less predictable than in the past.

Source: http://oilpro.com/post/18351/enis-egypt-gas-find-further-scrambles-lng-markets-future

Egypt Has 7 Other Blocks in Mediterranean Similar to Eni’s New Shorouk Discovery - EGYPT OIL & GAS

Thursday, 10th September 2015

Dr. Wafik Meshref, the Exploration General Manager at Sahara Oil & Gas Company told Egypt Oil & Gas that there are at least seven additional blocks in the Mediterranean Sea that have similar or twin lithology to Shorouk Block.

The Shorouk Block made headlines around the world last week when Italian oil major Eni announced a major gas discovery from it. The discovery is slated to be the biggest ever in Egypt and the Mediterranean.

The seven other blocks are: BP’s North El Max, IEOC’s North El Dikhalla, North Leil, and Karawan, Edison’s North Port Fouad and North Thekah, as well as Dana Gas’ North El Arish. These blocks could have reserves upwards of 200 tcf, but they require more daring and aggressive exploratory drilling plans. All the blocks are deepwater Mediterranean.

In May of 2010 the USGS issued a Geological Survey Fact Sheet of Assessment for Undiscovered Oil and Gas Resources of the Nile Delta Basin Province and Eastern Mediterranean. They estimated reserves of 1.8b barrels of recoverable oil, 223 tcf, and 6b barrels of natural gas liquids in the areas using a geology-based assessment methodology.

SOURCE

Wednesday, September 9, 2015

Ταξίδι - αστραπή στην Κύπρο αύριο για τον επικεφαλής της ΕΝΙ | Ο ΦΙΛΕΛΕΥΘΕΡΟΣ

Συναντάται αύριο με τον Πρόεδρο της Δημοκρατίας

Ταξίδι - αστραπή στην Κύπρο αύριο για τον επικεφαλής της ΕΝΙ


Λευκωσία: Έρχεται αύριο για επίσκεψη μερικών ωρών στην Κύπρο ο επικεφαλής του ιταλικού κολοσσού ΕΝ,Ι Κλαούντιο Ντεσκάλζι. Σύμφωνα με επίσημη ανακοίνωση, ο κ. Ντεσκάλτζι θα γίνει δεκτός στις 10.15 π.μ. από τον Πρόεδρο της Δημοκρατίας στο Προεδρικό Μέγαρο και στη συνάντηση θα παρευρεθεί και ο Υπουργός Ενέργειας, Γιώργος Λακκοτρύπης.

Η επίσκεψη είναι φανερό ότι γίνεται κάτω από τις νέες συνθήκες που δημιούργησε η ανακάλυψη του τεράστιου κοιτάσματος στην αιγυπτιακή ΑΟΖ, πολύ κοντά στα τεμάχια 10, 11 και 12 της Κυπριακής Δημοκρατίας και τις νέες ερμηνείες που δίνονται στη γεωλογική εικόνα των πιθανών κοιτασμάτων της περιοχής.

Το ενδεχόμενο επέκτασης του τεράστιου κοιτάσματος των 30 - 35 τρις κυβικών ποδών φυσικού αερίου, εντός της κυπριακής ΑΟΖ είναι αναμενόμενο ότι επίσης θα συζητηθεί, ανάλογα και με την πρόοδο των μελετών της ΕΝΙ ως προς την έκταση και τη μορφολογία του κοιτάσματος.

Οι σχεδιασμοί της ΕΝΙ σε συνεννόηση με την κυβέρνηση της Αιγύπτου για την ανάπτυξη του κοιτάσματος, τα χρονοδιαγράμματα και το πώς επηρεάζεται η Κύπρος, θα αποτελέσουν θέμα ενημέρωσης του Προέδρου Αναστασιάδη από τον επικεφαλής του ιταλικού κολοσσού.

Επίσης, δεν είναι τυχαίο ότι η επίσκεψη γίνεται μετά και την έγκριση από πλευράς Υπουργικού Συμβουλίου στη Λευκωσία, της παράτασης που ζήτησε η ΕΝΙ στις ερευνητικές της δραστηριότητες στην Κυπριακή ΑΟΖ.

Στο τραπέζι της αυριανής συνάντησης, αναμένεται να τεθούν και  τα προγράμματα της ΕΝΙ και τα σχετικά χρονοδιαγράμματα για τα τεμάχια 2,3 και 9 των οποίων έχει τα δικαιώματα, όπως και η μέχρι τώρα αναδιατύπωση του γεωλογικού χάρτη της περιοχής από την ΕΝΙ μετά τις δύο μη επιτυχείς γεωτρήσεις.

Το νέο ενδιαφέρον που δημιουργείται στην περιοχή, δεδομένου μάλιστα ότι το τεμάχιο 10 στην Κυπριακή ΑΟΖ είναι «ελεύθερο» μετά την αποδέσμευσή του από την TOTAL, είναι προφανές ότι είναι ένα θέμα που απασχολεί και τις δύο πλευρές.

Παράλληλα, εμμέσως πλην σαφώς, με την επίσκεψή του στην Κύπρο και την συνάντηση με τον Πρόεδρο της Δημοκρατίας, είναι φανερό ότι θα δοθεί και το μήνυμα ότι η ΕΝΙ δεν έχει εγκαταλείψει την δραστηριότητά της στην Κύπρο είτε για πολιτικούς λόγους, είτε για επιχειρηματικούς λόγους – δηλαδή την απουσία ερευνητικού ενδιαφέροντος.

Γράφει: Πέτρος Θεοχαρίδης

Source: http://www.philenews.com/el-gr/top-stories/885/275668/taxidi-astrapi-stin-kypro-ayrio-gia-ton-epikefalis-tis-eni

Monday, September 7, 2015

ENERGY SECURITY WILL NOT CURE ALL OF EGYPT'S ILLS | Natural Gas Europe

The headquarters of the state-owned Egyptian Natural Gas Holding Co. in Cairo in April 2012. (KHALED DESOUKI/AFP/Getty Images) via Stratfor
The headquarters of the state-owned Egyptian Natural Gas Holding Co. in Cairo in April 2012. (KHALED DESOUKI/AFP/Getty Images) via Stratfor

September 07th, 2015 | Natural Gas Europe

ENERGY SECURITY WILL NOT CURE ALL OF EGYPT'S ILLS

Summary

Italian oil firm Eni's Aug. 30 announcement that it has discovered the largest known natural gas deposit in the Mediterranean in Egyptian waters means Egypt could re-establish its energy independence with natural gas supplies, ending several challenging years for the country's energy sector.

Analysis

For most of the past decade, international energy producers have been able to earn only $2.50 to $2.65 per mmbtu for the natural gas that they sold to EGAS, the Egyptian domestic natural gas company. This pales in comparison to most global natural gas prices, which at times have exceeded $15 per mmbtu. (Under the terms of the deals by which international oil companies operate in Egypt, Cairo can force them to sell at below-market rates.) Making matters worse, Cairo has struggled to pay international oil companies. By late 2013, Egypt owed energy firms an estimated $6 billion to $7 billion, prompting the firms to hold off on numerous exploration projects. Reduced investment resulted in lower Egyptian production as older fields and wells saw production declines. Between 2012 and 2014 alone, Egyptian production fell from 61 billion cubic meters to 49 bcm.
Meanwhile, Egypt's natural gas demand, which has grown every single year for more than three decades, reached 53 bcm in 2013. This had two major effects. First, falling domestic production invariably meant falling domestic supply because Egypt had no ability to import natural gas from other producers, causing Egypt's domestic consumption of natural gas to fall to 48 bcm by 2014. Second, it meant that Egypt had to force energy companies to send even more of their natural gas to the domestic market, making it even more difficult for energy companies to justify reinvesting in Egypt's upstream sector. None of this was sustainable.
After his 2014 re-election, President Abdel Fattah al-Sisi carried out reforms in the energy sector, including reducing energy subsidies that had accounted for 25 percent of the government's budget. It allowed Cairo to begin repaying foreign oil companies, lowering its outstanding debt from more than $6 billion in late 2013 to $3.5 billion at the end of June 2015. (Cairo hopes the debt dropped below $3 billion in August, though figures are not yet available.) In one example of debt repayment, Egypt will pay Eni from $4 to $5.88 per mmbtu versus $2.65.
The higher return for oil companies means new projects and delayed ones are back on the table. In March, BP announced that it would invest $12 billion to develop two offshore blocks that would start production in 2017, to eventually produce 12 bcm annually. Meanwhile, Eni has said that it will fast-track the development of its recent discovery and that it hopes to begin production by 2017. The timetable is likely optimistic, but the field could add at least another 12 bcm of production by the early 2020s. International oil companies probably will remain interested in Egypt because it is one of the few places where returns have increased over the past five years whileglobal energy prices have dropped.
Egypt's falling production levels had led Cyprus and Israel to believe they could step in to supply Egypt's needs. In 2011, Noble Energy discovered the Aphrodite natural gas field in Cypriot waters a year after finding the Leviathan natural gas field in Israeli waters. Both fields, however, are expensive deepwater fields far from traditional natural gas markets such as Europe. Any export project to supply those markets — such as floating liquefied natural gas options or a pipeline to Turkey — could become prohibitively expensive now that Egypt has had another major natural gas field discovery.
Both Eni's and Noble's natural gas could be brought onstream by 2020. Proximity, the simpler approval process in Egypt and its overall higher potential resource base mean that Eni's project has likely vaulted ahead of Leviathan. Since Israel's domestic energy needs would account for just 60 percent of Leviathan's potential production, the rest would have to be exported for the project to make economic sense. Eni's announcement has therefore put the entire Leviathan project in jeopardy.
Israel had hoped to see Egypt become energy dependent on Israeli natural gas to strengthen their strategic relationship. But even though Israel will not be able to use energy to build its relationship with Cairo, energy security in Egypt also improves the chances of government stability. And this would benefit Israel, which wants to see the military remain the core pillar of the Egyptian state.
Natural Gas Europe is pleased to provide this article in cooperation with Stratfor, a Natural Gas Europe Knowledge Partner.  For more visit http://www.stratfor.com/   Follow Stratfor: @stratfor on Twitter | Stratfor on Facebook

Source: http://www.naturalgaseurope.com/energy-security-will-not-cure-all-of-egypts-ills-25301

Noble Energy plans for potential suit against Israel | Globes

Noble Energy plans for potential suit against Israel


07/09/2015, Amiram Barkat, Globes

By registering in Cyprus, the US energy company prepared the groundwork for a case against the Israeli government in international courts.


What will Noble Energy do if the gas framework is never approved? The answer becomes more relevant each day as Prime Minister Benjamin Netanyahu keeps sinking deeper into the quicksand from which he has been trying to rescue the agreement.  

Even if the likelihood of an international arbitration suit continues to grow, it remains the measure of last resort for Noble.

Legal Option
Noble has been preparing in recent years for an unsavory outcome which pushes them to seek international arbitration. The decision to prepare a legal option was taken by Noble following an in-house process that occurred in the wake of the increased taxes recommended by the Sheshinski Committee. The central claim being that the state had reneged on a promise to the firm that the tax rates for the Tamar reservoir are not increased.
During the Knesset hearings over the legislation to raise the tax levels, Noble representatives made clear threats over the filing of a claim through international arbitration but it was never served.
Sources close to Noble previously claimed that certain voices regretted that decision and believed that if the US energy giant had served suit during the Sheshinski proceedings, Israel would be reluctant to amend its regulations like it has in the past for example, placing a limits on export levels.

Noble was formerly set on the notion that any legal proceeding would have
Members of the Knesset Finance Committee discuss the state budget, November 15, 2015 by Olivier Fitoussi
irreversible consequences for its ties to Israel, which are based in mutual interests and a long-term strategic partnership. However, Israeli sources in contact with Noble claim that they have felt the company toughened its position since its CEO was replaced at the end of last year.

Noble has two major advantages if it were to seek international arbitration.
First, Noble enjoys particularly powerful privileges as a foreign investor in the Israeli market. Noble Energy, it is widely known, is an American firm based in Houston. As such, the government recognized Noble as an American company.

The state's position, based on detailed opinions of highly-respected jurists, is that American investors in Israel are protected by a trade pact from 1951, which provides investors relatively weak legal protections.

But the Ministry of Justice slipped up and did not notice that, technically, Noble operates in Israel under its subsidiary Noble Energy Mediterranean listed in Cyprus.

The rights of Cypriot investors in Israel and Israeli investors in Cyprus are protected by a treaty signed between the states in 1998. That treaty provides investors with much more powerful protections than the pact with the US, like the MFN clause which promises each Cypriot investor in Israel the best possible defense that Israeli has agreed to in any international treaty.

The second advantage Noble carries is Israel's pathetic record in international courts. Much like the traditional charge at the Eurovision Song Content, Israelis are convinced that the "judges are against us" in arbitration procedures as well.

This concern is based partly on the fact that Israel has never won an international suit. So far, Israel has badly faced two major arbitration courts; the cases against Egypt and Iran show that, above all, Israel tries to avoid arriving at arbitration because it is deeply concerned it will lose.

If Noble does choose to press ahead with the court option, its suit will be based on the claim that the regulatory changes undertaken by the Israeli government severely damaged the financial value of the firm's holdings in the gas reservoirs.

An Israeli source that looked at the legal proceedings told "Globes" that Noble estimated the financial damage at "many billions of dollars."
It is tough to guess at the likelihood the suit would succeed. "You know how you'll enter the courthouse, but you can never tell how you'll be when you leave," said Adv. David Kornbluth, formerly of the Ministry of Foreign Affairs' legal department, in an interview today with Israel Army Radio.

Published by Globes [online], Israel business news - www.globes-online.com - on September 7, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Source: http://www.globes.co.il/en/article-noble-planned-ahead-for-potential-suit-against-israel-1001067271