Friday, February 1, 2019
Cyprus Hydrocarbons Company Takes Strides Towards Country’s Emergence as Energy Hub - SOUTH EU SUMMIT
1 FEBRUARY 2019
The Cyprus Hydrocarbons Company was established in 2014, following natural gas discoveries in the Eastern Mediterranean, to be in charge of all hydrocarbon discoveries in Cyprus’ Exclusive Economic Zone. As the world’s youngest national oil and gas company, it is working diligently under the leadership of Dr. Toula Onoufriou, to support the development of Cyprus’ hydrocarbons’ sector, and make the vision of Cyprus as a regional energy hub a reality.
In 2015, Italian oil and gas company Eni, discovered the Zohr natural gas field in the Egyptian sector of the Mediterranean Sea. This field — with possible resources of more than 30 trillion cubic feet of gas — has produced a bonanza of high-level interest in the potential of the Eastern Mediterranean to become a major gas hub, connecting Europe, Africa, and the Middle East. A wave of natural gas field discoveries followed, in the waters surrounding Cyprus, Israel and Turkey – including Cyprus’ Aphrodite field, discovered in 2011.
But interest in this region did not begin with the Zohr discovery. Eni and other oil companies had for a few years been drilling wells, hoping to find a prize of massive gas reserves. Although the reserves discovered in Cyprus’ Aphrodite field were not considered sufficient to be commercially viable, Cyprus decided that it was time to establish a state-owned oil and gas company, to deal with any discoveries in the island-nation’s Exclusive Economic Zone (EEZ), in the Eastern Mediterranean. The Cyprus Hydrocarbons Company (CHC) was established in 2014, and today is responsible, for the management, promotion, and exploitation, of all the country’s hydrocarbon reserves located in the EEZ.
“In the last four years we’ve been, I believe, very successful in attracting a high calibre of people, with both academic qualifications but also strong industry international experience, which is essential in establishing a company like this, but also to establish a company that will provide a role model for Cyprus to be able to work at a very high international level, in terms of professionalism, ethos — and really bringing together the right people, in the right environment, so that we can achieve what we all have as our vision for the future,” said Toula Onoufriou, who has been President of CHC since its founding.
That high-level talent works on things like prospective reserve analyses, (following the Zohr discovery), and a development plan for Cyprus’ Aphrodite field. Cyprus’ second major gas discovery came in 2018, when Eni announced its detection of the Calypso field, with an estimated 6-8 Tcf (trillion cubic feet) of natural gas. And ExxonMobil, a U.S. energy giant, along with Qatar Petroleum, signed a deal with Cyprus to engage in exploratory drilling in Block 10, southwest of Cyprus, beginning in 2018. International attention is now set on the results of the exploratory drilling that the consortium commenced on November 16th, 2018 – due for completion within the coming weeks. Should a sizable discovery of natural gas be made, Cyprus could, at long last, make the leap to the exploitation of its offshore gas resources.
“We’re optimistic about the prospects in Block 10,” said Tristan Aspray, ExxonMobil’s Vice President of Exploration for Europe, Russia, and the Caspian, in an exclusive interview in December. The “play elements are present on a regional scale” and this, added Aspray, means that “there are clearly reservoirs that can contain this gas in commercial quantities at places like Zohr, and Aphrodite, and Calypso, and that’s very encouraging.”
“The presence of major players from the industry, including Exxon, Eni, Total, and so on, shows the level of confidence in terms of the potential prospectivity for hydrocarbons in the region,” said Onoufriou, who is also a Professor of Infrastructure Reliability and Management, in the Department of Civil Engineering and Geomatics at the Cyprus University of Technology, and an Academic Visitor at Imperial College in the UK.
Still, challenges remain. First and foremost is the challenge of ensuring a stable regulatory environment, for all of the new activity in the hydrocarbons sector “that will support the industry, that will create the level of confidence that will attract additional players — operators, service companies, and other specialists who want to invest and work in Cyprus,” Onoufriou explained. She added, “We need to invest as a country, in establishing an energy centre that will act as a hub, and as a centre, to attract these kinds of activities.” This would mean partnering with industry, academia, the government, and other international focal points of excellence, in order to build a vibrant knowledge and technical hub surrounding hydrocarbons.
A key in all of this is “bringing the countries together, in terms of sharing resources, being proactive, having joint action plans for unwanted events that may occur and, of course, facilitating knowledge development, and research, and innovation,” said Onoufriou.
Cyprus’s big project right now, in terms of international collaboration, is working with Egypt to get Cypriot natural gas to Europe, once it is ready for exportation. The two countries signed a pipeline agreement in September, which outlines the plan for the construction of a subsea pipeline, from Cyprus’ Aphrodite gas field, to Egypt, where the gas will be liquefied and ready for re-export.
“The Egypt monetisation option, in terms of exporting to Egypt, is a good option in many ways, in terms of being able to exploit existing infrastructure in the LNG [liquified natural gas] plants in Egypt, and potentially liquefying the natural gas from Cyprus, to find its way to Europe,” Onoufriou commented.
The Egypt connection would be the next step in turning Cyprus into a regional energy hub — combined with recent and future gas discoveries, along with other cross-border energy pipeline projects, particularly the proposed $7 billion EastMed pipeline project. The EastMed pipeline would enable the transfer of Israeli and Cypriot gas to the EU, via Greece and Italy, and while positive strides have been made towards the materialisation of the project amongst the involved countries’ leaders, a final approval is expected from the European Union throughout the course of the year.
Cyprus’ central location in this potentially grand, energy-producing region, could “also be a catalyst for supporting Europe, potentially in terms of their objective for diversification and energy security,” Onoufriou noted.
In an exclusive interview with Cypriot President, Nicos Anastasiades, he said he welcomed “the special attention paid by all, to the Eastern Mediterranean, as a region that can become a reliable energy supplier, thus contributing substantially to the EU’s energy security,” adding that he hoped for the Intergovernmental Agreement, that had been negotiated between Cyprus, Greece, Israel, and Italy, to be signed as soon as possible.
Europe has been calling for diversification of its energy supply, due to an over-reliance on Russian energy, and the potential dire disrupt to supply if Europe and Russia ever have a big enough tiff — which looks increasingly likely, as Russia uses more belligerent rhetoric toward the EU. The Cypriot and entire Eastern Mediterranean gas resources, could be the answer to Europe’s risk reduction in this regard.
Onoufriou added that the discovery and exploitation of hydrocarbon resources could go beyond diversification, to resolving long-standing regional tensions. “We see this as a great incentive for all the countries in the region to come closer, and overcome long standing differences, including the Cyprus political issue,” she said.
Toula Onoufriou has been President of the Cyprus Hydrocarbons Company since its establishment in 2014. She is also a Professor of Infrastructure Reliability and Management, in the Department of Civil Engineering and Geomatics, at the Cyprus University of Technology, and an Academic Visitor at Imperial College in the UK. She has received numerous awards for her work, including the Stanley Gray Award by the Institute of Marine Engineers UK for the best publication in marine technology, and the SmartEN Marie Curie ITN Programme by the European Commission. Onoufriou obtained her PhD in Offshore Structures with a scholarship, from Imperial College, and she graduated at the top of her class in Civil Engineering from City University (UK), where she was awarded the Renie Prize.