Cypriot Energy Minister Yiorgos Lakkotrypis is optimistic about his country’s third licensing round. (PA) Cypriot Energy Minister Yiorgos Lakkotrypis is optimistic about his country’s third licensing round. (PA)
Cyprus’s imminent third licensing round will offer offshore acreage with similar geology to the area in which Egypt’s Zohr field was discovered, according to Yiorgos Lakkotrypis, Cyprus’s energy minister.
Lakkotrypis spoke to Natural Gas Daily about the country’s energy potential, developing the Aphrodite field and routes to market for Cypriot gas.
NGD: Is the Cyprus offshore acreage study complete? What were its findings?
Yiorgos Lakkotrypis: The first part is complete. It’s shown something very interesting, which encouraged us to proceed with the third licensing round. The Eratosthenes subsea mountain seems to have formed with carbonate structures that are similar to Zohr, which was discovered in Egypt last year. We have identified a number of similar structures within Cyprus, which is very encouraging geologically […] We don’t have to wait for the second part of the study [to launch the third round] because the potential bidders will do their own studies.
NGD: How will the contracts on offer be different to those of previous rounds?
YL: They are basically improvements. As we have implemented contracts we have seen some discrepancies that we want to fix. They will still be production-sharing contracts, which has been the case in the previous two rounds. It’s difficult for me to pinpoint the changes but [they] will help the contracts to become more readable – there is nothing fundamental being altered.
NGD: What progress is being made on blocks that were tendered in previous rounds?
YL: Total renewed Block 11 for two more years in February, and now we are preparing for an exploration well, which will hopefully be completed in 2016. Eni extended its contracts for blocks 2, 3 and 9 by two years in January. They are recalibrating their data and we should be hearing about their plans soon.
NGD: When do you expect financing arrangements for the development of the Aphrodite gas field to be in place?
YL: The field was declared commercial by the consortium in 2015, and the field production plan has been submitted. We’ve had numerous discussions since, and of course BG Group has joined the consortium, meaning that we are now waiting for the new consortium to restart discussions on the development and production plans. Once that happens, an exploitation licence will need to be issued for the agreed plans to take effect.
NGD: What export options are being considered?
YL: When we had the initial discovery at Aphrodite we started looking at all of the options available to us – LNG, FLNG, pipeline options, CNG. The amount of gas that is estimated to be in the Aphrodite discovery justifies pipeline options. The Cyprus National Hydrocarbons Co., together with the Block 12 contractors, is already in commercial negotiations with buyers in Egypt – which is our number-one option – and also for domestic use in Cyprus.
NGD: As piping gas to Egypt is Cyprus’s preferred option, are you still considering alternatives?
YL: For the Aphrodite discovery, the volumes justify this solution. Certainly for future discoveries, all of the options will be on the table again.
NGD: When might construction of a Cyprus-Egypt gas pipeline start? Has the pipeline study been completed?
YL: This is a discussion we are having within the framework of the development and production plan. A lot will depend on the commercial agreements. Right now, we do have some preliminary dates, but it’s too premature to say concretely how the commercial negotiations progress […] First gas will be in 2020, so the pipeline should be complete by then. We did a report with the Egyptian government and that was finished a few months ago. Certainly there are more details that need to be addressed, and that could happen within the framework of a FEED or pre-FEED study, which needs to take place.
NGD: What did the study uncover? Which site did the report identify as the most suitable?
YL: The report identified three sites that would land the pipeline to the Egyptian shore and analysed the advantages and disadvantages of each of them. There was one clear winner on the first glance, if you look only at infrastructure, but it is too risky to say anything now because it all depends on who the Egyptian buyer is, how they want it delivered and where it will land.
NGD: What level of production would justify the addition of an LNG plant in Cyprus?
YL: The analysis that we have was done at a different oil price level. It’s hard to say a number right now that is correct. What is important is that this is an option that is on the table depending on future discoveries and conditions in the market.
SOURCE
Cyprus’s imminent third licensing round will offer offshore acreage with similar geology to the area in which Egypt’s Zohr field was discovered, according to Yiorgos Lakkotrypis, Cyprus’s energy minister.
Lakkotrypis spoke to Natural Gas Daily about the country’s energy potential, developing the Aphrodite field and routes to market for Cypriot gas.
NGD: Is the Cyprus offshore acreage study complete? What were its findings?
Yiorgos Lakkotrypis: The first part is complete. It’s shown something very interesting, which encouraged us to proceed with the third licensing round. The Eratosthenes subsea mountain seems to have formed with carbonate structures that are similar to Zohr, which was discovered in Egypt last year. We have identified a number of similar structures within Cyprus, which is very encouraging geologically […] We don’t have to wait for the second part of the study [to launch the third round] because the potential bidders will do their own studies.
NGD: How will the contracts on offer be different to those of previous rounds?
YL: They are basically improvements. As we have implemented contracts we have seen some discrepancies that we want to fix. They will still be production-sharing contracts, which has been the case in the previous two rounds. It’s difficult for me to pinpoint the changes but [they] will help the contracts to become more readable – there is nothing fundamental being altered.
NGD: What progress is being made on blocks that were tendered in previous rounds?
YL: Total renewed Block 11 for two more years in February, and now we are preparing for an exploration well, which will hopefully be completed in 2016. Eni extended its contracts for blocks 2, 3 and 9 by two years in January. They are recalibrating their data and we should be hearing about their plans soon.
NGD: When do you expect financing arrangements for the development of the Aphrodite gas field to be in place?
YL: The field was declared commercial by the consortium in 2015, and the field production plan has been submitted. We’ve had numerous discussions since, and of course BG Group has joined the consortium, meaning that we are now waiting for the new consortium to restart discussions on the development and production plans. Once that happens, an exploitation licence will need to be issued for the agreed plans to take effect.
NGD: What export options are being considered?
YL: When we had the initial discovery at Aphrodite we started looking at all of the options available to us – LNG, FLNG, pipeline options, CNG. The amount of gas that is estimated to be in the Aphrodite discovery justifies pipeline options. The Cyprus National Hydrocarbons Co., together with the Block 12 contractors, is already in commercial negotiations with buyers in Egypt – which is our number-one option – and also for domestic use in Cyprus.
NGD: As piping gas to Egypt is Cyprus’s preferred option, are you still considering alternatives?
YL: For the Aphrodite discovery, the volumes justify this solution. Certainly for future discoveries, all of the options will be on the table again.
NGD: When might construction of a Cyprus-Egypt gas pipeline start? Has the pipeline study been completed?
YL: This is a discussion we are having within the framework of the development and production plan. A lot will depend on the commercial agreements. Right now, we do have some preliminary dates, but it’s too premature to say concretely how the commercial negotiations progress […] First gas will be in 2020, so the pipeline should be complete by then. We did a report with the Egyptian government and that was finished a few months ago. Certainly there are more details that need to be addressed, and that could happen within the framework of a FEED or pre-FEED study, which needs to take place.
NGD: What did the study uncover? Which site did the report identify as the most suitable?
YL: The report identified three sites that would land the pipeline to the Egyptian shore and analysed the advantages and disadvantages of each of them. There was one clear winner on the first glance, if you look only at infrastructure, but it is too risky to say anything now because it all depends on who the Egyptian buyer is, how they want it delivered and where it will land.
NGD: What level of production would justify the addition of an LNG plant in Cyprus?
YL: The analysis that we have was done at a different oil price level. It’s hard to say a number right now that is correct. What is important is that this is an option that is on the table depending on future discoveries and conditions in the market.
SOURCE
