“Nessun Dorma” | eniday

 By Marco Alfieri on October 5, 2015

Like all great exploration discoveries also the Zohr discovery is full of surprises, the unexpected, intuitions, mistakes, skill, enthusiasm, and ups and downs in which the human element is as crucial as the technology. It’s a story worth telling from the beginning because we already know what Eni has found in the Egyptian offshore and the geopolitical impact on the area, but still very little about how we arrived at this mega-discovery. A three-year journey – together with an extraordinary team of geologists, geophysicists, drilling engineers and logistics specialists, experts in ICT and economic evaluations – that it was was to tell from the inside…     

“The truth? I’ve never seen more than 600 metres of gas permeated rock with pressure points so aligned..” my new explorer friend tells.

While he speaks his small eyes flash with emotion and adrenaline. It’s a warm September afternoon, we are sitting in an empty room in San Donato, a long way from the Egyptian platforms, but it feels as if we are in one of those construction site containers, between excitement and curiosity.

Like all great exploration discoveries also the Zohr discovery is full of surprises, the unexpected, intuitions, mistakes, skill, enthusiasm, and ups and downs in which the human element is as crucial as the technology.

It’s a story worth telling from the beginning because we already know what Eni has found in the Egyptian offshore, the potential of the discovery, the geopolitical impact on the area and the possible developments of the system (a Mediterranean gas hub), but still very little about how we arrived at this mega-discovery. How the teams in Egypt and San Donato worked for three long years, what were the decisive moments, the difficulties and the diffidence that were overcome.

Making a discovery is like winning a football championship. It takes patience, method, tenacity, talent, expertise, firmness, team work, vision, cold blood (and a warm heart, always).

Often, we journalists like to tell it as if it were the final of the Uefa Champions League. With soccer stars like Andrea Pirlo or Leo Messi, dribbling round the defence and going for goal with the ball. But this risks trivializing, simplifying or over-personalising.

“Meet the man who discovered …” blah blah blah …

But that’s not how it works.

One of the first things my explorer friend told me was even disarmingly: “We are not like Indiana Jones as some people imagine. We don’t have a whip, we don’t consult miraculous algorithms nor do we whisper to stones … ”

Each discovery is the result of the geological knowledge and insights of a great team. The whole company is involved and bings its contribution: those who explore, drill, develop the wells, those people in IT, those who make economic evaluations, and on up to the top management.

This is why a premise is necessary.

The story of Zohr began in mid-2012 when Egas, the Egyptian state exploration agency for the offshore Nile Delta, announced a competitive bid, or “bid round” to use the technical term, in the Mediterranean offshore, with the offer to oil companies of 15 blocks to be evaluated.

Politically the period was full of uncertainty, it was the post-Arab Spring. In Cairo in June the Muslim Brotherhood came to power, and the major oil companies were having difficulty in collecting the arrears due to them. Eni decided to keep a regional base in Egypt and continue to study, from a geological point of view, the area of ​​the Levantine basin.

For as long as possible, the first rule of an energy company is that contingent and geopolitical factors should never make you stop searching (and trying to understand). Oil is a long-term business; tomorrow things can be different, maybe even better.

But there is a second factor. The IEOC, historically the driver of exploration activities in Egypt, for the first time in forty years was about to run out of areas to explore. Uncertainty, as Mao Tse Tung would have said, is an excellent opportunity to try to reconstruct the portfolio with more or less limited investment (the competition would be low), pending an improvement in the conditions for investing in the country.

- See more at: http://www.eniday.com/en/nessun-dorma/#sthash.N8FAozT7.dpuf

Source: http://www.eniday.com/en/nessun-dorma/

Gas Strategies Discussed in Greece | Natural Gas Europe

October 05th, 2015

GAS STRATEGIES DISCUSSED IN GREECE

The annual Global Oil&Gas Black Sea and Mediterranean Conference took place recently in Athens, Greece, and various stakeholders laid their views upon the gas culminations in the regional markets.

Danila Bochkarev, energy fellow at the EastWest Institute in Brussels, attested that the proposedTurkish Stream pipeline project could indeed become a reality in the coming years, albeit in a different form as presently presented: significantly lower in terms of volume capacity - up to 75% less. That means the pipeline would have a maximum 17.5bcm capacity and chiefly supply Turkish and Greek markets without further expansion.

It is not improbable that the Trans Adriatic Pipeline (TAP) could be used to transfer limited amounts of Russian sourced gas. On the other hand, Nord Stream is currently of outmost importance for the overall energy security of the major EU natural gas markets and in that respect, regulatory affairs should be taken into account regarding EU-Gazprom future supply relations.

The Greek government, through incumbent Energy Minister Panos Skourletis, also pledged to follow through with Turkish Stream without making any assumptions around changes in volume or route.

The impeding opening up of the East Mediterranean natural gas supply route was touched upon by a cadre of experienced policy makers on the subject. The former head of the Energy Ministry directory of Cyprus, Solon Kasinis, placed emphasis on the recent gas discoveries offshore Egypt in the Zohr field, which could have more than 1 trillion cubic metres of gas in place.

According to the Cypriot expert, plans that call for the establishment of a pipeline from that region to the EU via Greece could be revitalized. In the coming months there should be strong competition and collaboration alike by all neighboring countries to firmly set up export infrastructure in the region, with a concentration on LNG installations. The Tamar field is operational and the Leviathan is about to be streamlined as well.

It was also noted that Italian ENI is still pursuing, after a 2-year break, potential gas resources offshore Cyprus in the sea blocks 2, 3 and 9, whilst French Total will commence its research by the end of this year in block 11.

Egypt has certainly emerged a big player and has its own set of options, including stronger cooperation with Israel and Cyprus and significant investment options in the LNG market. By 2021, the situation should be settled and if new discoveries are made, the region could see a golden era of natural gas both in terms of local gasification and in export potential.

Former chairman of the Cypriot hydrocarbon agency, Charles Ellinas, pointed out that the plan to establish an LNG terminal in the Vasiliko area of Cyprus could become a reality if sources of gas are also being directed from Israel.

There are also indications for more gas to be found offshore Cyprus and the major difficulty nowadays is to secure long-term financing for any project at hand. By combining forces with Israel, Nicosia could hope for options to export both to EU and Asian markets.

With the Zohr discovery and optimistic predictions for more reserves, Egypt could again become net exporter by 2022, a development that could ease the country's commercial deficit by many billions of dollars annually.

In terms of price competitiveness, the cost of Cypriot and Israeli gas sent to Europe would be around $12 per MMBtu in today's prices, which is more than Gazprom's price to the same destination. That means that any potential exports will have to take that under consideration. In any event, exports would be a long term issue and not for the short term.

EU authorities, according to Mr Ellinas, are generally speaking in favor of projects such as the East Med pipeline, but it is not in the immediate priorities of the Union or any member states, save Greece and Cyprus. For the moment, the EU is primarily concentrating efforts on the Southern Corridor project with its TANAP-TAP system of pipelines along with assorted interconnectors. Cyprus, therefore, should speed up its efforts for a new round of explorations and be ready to hand out licensing for new sea blocks by 2016.

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 Natural Gas Europe welcomes all viewpoints. Should you wish to provide an alternative perspective on the above article, please contact editor@minoils.com  

Kindly note that we only lightly edit content for grammar and do not edit externally contributed content.

Source: http://www.naturalgaseurope.com/gas-strategies-discussed-in-greece-25580

Our View: Reality must replace geo-political and gas dreams | Cyprus Mail

OCTOBER 4TH, 2015 

President Nicos Anastasiades and Egyptian President Abdel Fattah al-Sisi in Nicosia in April.

THE FOREIGN ministers of Cyprus, Greece and Egypt met when they were in New York last week in order to arrange the third tripartite summit which is expected to be held later this month in Athens. This would complete a full circle of tripartite summits, with one having been held in Cairo last year and a second in Nicosia in April.

Neither of these produced anything more tangible than some pictures of the smiling leaders shaking hands. There was also a declaration signed in each case – the Cairo and subsequently the Nicosia declaration – which spoke of economic co-operation and the strengthening of political ties among the three countries. While building good relations with neighbouring countries is good, we suspect that much more is made out of these summits than they actually have to offer.

President Anastasiades seems to relish them, as they support much of the government discourse regarding Cyprus’ geo-strategic value, the potential of becoming a regional energy centre and the need to forge alliances with neighbouring countries. Since the time of the Papadopoulos presidency the foreign ministry has been arguing about the need for geostrategic alliances, on the dubious grounds that these would strengthen Cyprus’ position in its dealings with Turkey.

Many politicians and newspaper columnists have repeatedly raised this issue, going as far as to suggest that geo-strategic alliances, based on energy co-operation, would be a better course to follow than engaging in negotiations for a settlement. The preferred country for a strategic alliance has been Israel – especially after Tel Aviv’s falling out with Ankara – and although there has been an exchange of visits between Prime Minister Benjamin Netanyahu and Anastasiades as well as a three-way meeting also involving Greece, nothing tangible has been agreed. The mooted tripartite summit of Cyprus, Greece and Israel has been more difficult to arrange, probably because Netanyahu does not see much point to it.

Cyprus is once again trying to box above its weight, but the problem is that it does not really have anything attractive to offer its potential strategic allies. As things stand, it is only a bit-player in the eastern Mediterranean energy field, given the relatively small quantities of natural gas that have been discovered. This has not stopped the government’s relentless efforts to play up the country’s energy significance and pursue alliances that have little more than publicity value.

Anastasiades and his energy minister Giorgos Lakkotrypis insisted, against all logic, that Egypt would be buying natural gas from Cyprus even after the discovery of huge deposits of natural gas in Egypt’s Zohr field – almost 10 times the quantity in our Aphrodite field. What company would invest hundreds of millions, if not billions, on pipelines to take gas from the Aphrodite field to Egypt which has huge quantities of hydrocarbons – much closer to home – that would meet its energy needs for decades? Anastasiades and Lakkotrypis need to stop claiming they will be selling gas to Egypt, because nobody can take them seriously.

In fact the entire government narrative about energy alliances that would strengthen Cyprus seems to be collapsing. Our other potential energy partner, Israel, which has never made any concrete commitment in relation to energy, has reportedly been talking to Turkey about the possibility of supplying it with natural gas. Netanyahu informed Anastasiades about this during his short visit to the island recently, suggesting that both countries could sell gas to Turkey, once there was a Cyprus settlement.

Despite the rhetoric about the energy alliances, Anastasiades has had meetings with the representatives of a big Turkish energy company in the past, indicating he is pragmatic enough to explore all options. How ironic that all the government’s grand designs have fallen by the wayside and the only potential client for our natural gas is Turkey which is not only a very big market, but is also close enough to be supplied at a competitive price.

Admittedly, there could be no such deal without a settlement, but it is still looks like the only viable option for Cyprus to monetise its modest gas finds. Having a huge market like Turkey’s so close and a deal to supply it would also be a big incentive for oil companies to increase their exploratory drilling in the Cypriot EEZ, especially as there would also be regional stability.

This is the pragmatic way forward and not the much-touted tripartite summits, which are little more than publicity exercises. Even the dream of becoming a regional energy centre requires a settlement to be realised.

Source: http://cyprus-mail.com/2015/10/04/our-view-reality-must-replace-geo-political-and-gas-dreams/

CYPRUS AND EGYPT COMMITTED TO MAINTAINING ENERGY TIES | Natural Gas Europe

October 01st, 2015

CYPRUS AND EGYPT COMMITTED TO MAINTAINING ENERGY TIES

Cyprus President Nicos Anastasiades met Egypt’s President Abdel Fattah el-Sisi in New York on Monday. The two leaders discussed regional cooperation on the sidelines of the UN General Assembly. Energy was an important item on the agenda following ENI’s huge discovery in Egypt’s Exclusive Economic Zone. Earlier this month, the Italian company announced it had discovered a natural gas field estimated to hold up to 30 Trillion Cubic Feet (Tcf) of natural gas in Egypt’s waters. The Zohr field is located in the Shorouk Block within Egypt’s maritime zone, only a few kilometers away from Cyprus’ Block 11, licensed to Frances’ TOTAL. ENI has also explored Cypriot waters for hydrocarbon but its two attempts to encounter exploitable amounts of natural gas in Block 9 of Cyprus’ EEZ were unsuccessful.

The two leaders stressed on the need to strengthen energy security to protect the region’s hydrocarbon resources. The two countries have been engaged in talks to export natural gas from Cyprus’ Aphrodite field, discovered by Texan Noble Energy in 2011, to Egypt’s export terminals at Damietta and Idku, operated respectively by Union Fenosa and BG. Egypt has been suffering from energy shortages due to a flat production, a rising domestic consumption and export obligations. The Zohr field will likely improve Egypt’s energy future, but the country may still have an appetite to import gas from neighbouring Cyprus and Israel as it moves ahead with the development of its indigenous offshore riches. ENI’s discovery has also prompted the Italian company to pursue its exploration activities offshore Cyprus. The proximity of the Zohr field to the Cypriot maritime zone has boosted the confidence of Cypriot officials who have urged ENI to pursue its efforts to find natural gas in Cypriot waters.

Licensed to drill in Blocks 10 and 11 of Cyprus' EEZ, TOTAL has not yet commenced its searches off the island’s coast for failing to identify “drillable prospects”, according to a statement made by the company in January 2015. ENI’s new discovery could prompt the French company to reconsider its presence in Cyprus. The size of the discovery made by ENI is an indication that the Levant region as a whole may be home to considerable amounts of hydrocarbon. ENI is also likely to have a renewed interest in exploring Cypriot waters. Block 11, licensed to TOTAL, may be open for bidding again in February 2016 when TOTAL’s license expires.

Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat 

Source: http://www.naturalgaseurope.com/cyprus-and-egypt-committed-to-maintaining-energy-ties-25653

Τζακ-ποτ πετρελαίου στην ΑΟΖ | SigmaLive

30 Σεπτέμβριος 2015, 07:59 | ΤΟΥ ΜΑΡΙΟΥ ΠΟΥΛΛΑΔΟΥ

Εντός της κυπριακής ΑΟΖ εκτείνεται η γεωλογική δομή του υπεργιγαντιαίου κοιτάσματος Ζορ

Υπάρχει κοίτασμα πετρελαίου κάτω ακριβώς από το αιγυπτιακό κοίτασμα φυσικού αερίου, και βρίσκεται κατά το ήμισυ εντός των θαλάσσιων τεμαχίων της Κυπριακής Δημοκρατίας

Μια εξόχως ευχάριστη έκπληξη φαίνεται πως μας επιφυλάσσει το αιγυπτιακό κοίτασμα Ζορ, αφού, σύμφωνα με επίσημους γεωλογικούς χάρτες του ιταλικού κολοσσού ENI, το υπεργιγαντιαίο (supergiant) κοίτασμα, που ανακαλύφθηκε πρόσφατα στην ΑΟΖ της Αίγυπτου, δεν γειτνιάζει απλώς με την ΑΟΖ της Κύπρου, αλλά μέρος αυτού εκτείνεται και εντός της. Υπενθυμίζεται ότι, όλο το προηγούμενο διάστημα, διάφορα ΜΜΕ, επικαλούμενα ενεργειακούς συμβούλους του Υπουργείου Ενέργειας, σωστά διεμήνυαν ότι το συγκεκριμένο κοίτασμα δεν εμπίπτει εντός της κυπριακής ΑΟΖ, χωρίς, ωστόσο, να αναφέρονται στα ενεργειακά πλεονεκτήματα που προκύπτουν από την επέκταση της γεωλογικής του δομής. Σημειώνεται ότι η «Σημερινή» προσπάθησε να επικοινωνήσει με τον Υπουργό Ενέργειας Γιώργο Λακκοτρύπη για περαιτέρω πληροφορίες, αλλά δεν κατέστη δυνατόν.

50%-50% η εξόρυξη
Όπως διαφαίνεται από τους τρεις επίσημους χάρτες της εταιρείας ENI, που δημοσιεύθηκαν στην ιστοσελίδα lygeros.org, από τους ειδικούς Νίκο Λυγερό και Ηλία Κονοφάγο, το αιγυπτιακό κοίτασμα Ζορ, αν και βρίσκεται σχεδόν ολόκληρο εντός της αιγυπτιακής ΑΟΖ, εντούτοις το ένα έκτο της γεωλογικής του δομής εκτείνεται και εντός της ΑΟΖ της Κύπρου.

«Αυτό είναι πολύ σημαντικό και δεν δόθηκε η πρέπουσα σημασία ακόμα κι από αρμοδίους. Έτσι, αν εξετάσουμε την τομή της γεωλογικής δομής, θα ανακαλύψουμε ότι υπάρχει κοίτασμα πετρελαίου, πολύ πιο κάτω από το κοίτασμα φυσικού αερίου κι ότι αυτό βρίσκεται κατά το ήμισυ στην κυπριακή ΑΟΖ. Με άλλα λόγια, η Κύπρος θα απολαύει του 50% της εξόρυξης αυτού του κοιτάσματος.

Η ENI προβλέπει ήδη να κάνει την επόμενη γεώτρηση του χρόνου γι’ αυτό το κοίτασμα», αναφέρουν οι δυο ειδικοί, προσθέτοντας: «Με άλλα λόγια, θα βοηθήσει την Κύπρο και από την πλευρά της αιγυπτιακής ΑΟΖ. Πρέπει, λοιπόν, να σταματήσει οριστικά η Κύπρος να μιλά αποκλειστικά για το κοίτασμα Αφροδίτη, αφού υπάρχουν τόσα αποθέματα που αλλάζουν τα δεδομένα. Αυτό σημαίνει πρακτικά ότι πρέπει να γίνει και μια καινοτόμος αλλαγή στο κυπριακό μοντέλο της αξιοποίησης της κυπριακής ΑΟΖ. Αλλιώς δεν μπορούν να συμπεριλάβουν αυτά τα στοιχεία. Η ανακάλυψη του κοιτάσματος Ζορ μέσω του πετρελαίου του αποτελεί μια νίκη για την Κύπρο και πρέπει να την εκμεταλλευτούμε στρατηγικά».

Τα χαρακτηριστικά του κοιτάσματος
Σε άλλο άρθρο τους, με τίτλο «Το βιογενές αέριο του Ζορ και οι προοπτικές στην Ελλάδα και Κύπρο», οι δυο καθηγητές τονίζουν ότι ένα από τα σημαντικότερα στοιχεία της ανακάλυψης του κοιτάσματος Ζορ είναι ότι πρόκειται για φυσικό αέριο, το οποίο είναι βιογενές, δηλαδή, όπως εξηγούν, αυτούσιο μεθάνιο κυρίως, πολύ νεότερο και δεν προέρχεται από το σπάσιμο του πετρελαίου. Επομένως, συνεχίζει το άρθρο, με το κοίτασμα Ζορ, η ιταλική εταιρεία ΕΝΙ ανοίγει νέους δρόμους και δημιουργεί προοπτικές που δεν είχαν υπολογιστεί, ενώ βλέπουμε ότι είναι υπεργιγαντιαία κοιτάσματα που αλλάζουν όλα τα δεδομένα της περιοχής. «Πρέπει, λοιπόν, ν’ αλλάξουμε και τα κλασικά μοντέλα σε αυτήν την περίπτωση, διότι δεν πρόκειται για ψαμμίτες, δηλαδή άμμο, αλλά για ασβεστόλιθους, που με το νερό εμπεριέχουν στοιχεία του φαινομένου Karstification, κατά συνέπειαν έχουν εξαιρετικά μεγάλο πορώδες», προσθέτουν.

Θετικές προοπτικές για Κύπρο - Ελλάδα
Όσον αφορά τον θετικό αντίκτυπο που αυτά τα δεδομένα μπορεί να έχουν στην περίπτωση Κύπρου και Ελλάδας, οι καθηγητές Λυγερός και Κονοφάγος τονίζουν ότι οι τροποποιήσεις των γεωλογικών μοντέλων από τις εταιρείες θα έχουν σημαντικότατες θετικές επιπτώσεις στην ΑΟΖ των δυο χωρών. «Είναι, λοιπόν, απαραίτητο να ασχοληθούμε με διαφορετικό τρόπο μ' αυτόν τον τομέα για να είμαστε πιο αποτελεσματικοί και για να προσδιορίσουμε καλύτερα και τις περιοχές, όπου πρέπει να γίνουν σεισμικές έρευνες. Διότι, με αυτά τα δεδομένα, αποδεικνύεται ότι πρέπει να έχουμε μια ευρύτερη ματιά για να είμαστε ανοιχτοί σε νέες γεωλογικές δομές ακόμα και στην περιοχή μας. Η Ελλάδα και η Κύπρος μέσω της τριμερούς με την Αίγυπτο μπορούν να παίξουν έναν δυναμικό ρόλο και στην Ανατολική Μεσόγειο και στην Ευρωπαϊκή Ένωση», αναφέρουν καταληκτικά.

Τριμερής Κύπρου-Ελλάδας-Αιγύπτου
Στο μεταξύ, συνάντηση με τον Πρόεδρο της Αιγύπτου Αμπτέλ Φατάχ Αλ Σίσι πραγματοποίησε χθες ο Πρωθυπουργός της Ελλάδας, Αλέξης Τσίπρας, κατά την οποία έγινε συζήτηση για τη στρατηγική σημασία της συνεργασίας μεταξύ των δυο χωρών. Προς την κατεύθυνση αυτή, οι δυο ηγέτες συμφώνησαν ότι σύντομα θα πραγματοποιηθεί η επίσκεψη ελληνικού κυβερνητικού κλιμακίου στην Αίγυπτο, προκειμένου να εντατικοποιηθεί η συνεργασία των δύο χωρών, στους τομείς της οικονομίας, του εμπορίου και των μεταφορών, κυρίως δε σε σχέση με την ανάπτυξη της νέας διώρυγας του Σουέζ.

Σημαντική υπήρξε επίσης η αναφορά για την επίσκεψη που θα πραγματοποιήσει σύντομα στην Ελλάδα ο Αιγύπτιος Πρόεδρος, προκειμένου να συζητηθεί περαιτέρω και η προοπτική πραγματοποίησης συνόδου τριμερούς συνεργασίας Ελλάδας, Κύπρου και Αιγύπτου. Τις απογευματινές ώρες πραγματοποιήθηκε η τριμερής συνάντηση και του Υπουργού Εξωτερικών της Ελλάδας Νίκου Κοτζιά με τους ομολόγους του, της Κυπριακής Δημοκρατίας Ιωάννη Κασουλίδη και της Αιγύπτου Σαμέχ Σούκρι, προκειμένου να γίνουν οι αρχικές προπαρασκευαστικές ενέργειες για την επερχόμενη τρίμερη συνάντηση σε επίπεδο αρχηγών κρατών, που αναμένεται να πραγματοποιηθεί το επόμενο διάστημα στην Αθήνα.

- See more at: http://www.sigmalive.com/simerini/politics/271594/tzakpot-petrelaiou-stin-aoz#sthash.yTDHqRIA.dpuf

Source: http://www.sigmalive.com/simerini/politics/271594/tzakpot-petrelaiou-stin-aoz

Σόλων Κασίνης Επιβεβαιώνει Δυνατότητα Κοιτάσματος ΖΟΡ Πετρελαίου

Μετά τις δηλώσεις ΕΝΙ για βαθύτερο στόχο Πετρελαίου κάτω από το Υπεργιγαντιαίο Κοίτασμα Φυσικού Αερίου ΖΟΡ, ο Σόλων Κασίνης και ο Νίκος Λυγερός σχολιάζουν τους χάρτες που δημοσίευσαν ο Ηλίας Κονοφάγος & ο Νίκος Λυγερός.

ISRAEL CONSIDERS SECOND OFFSHORE LNG TERMINAL | Natural Gas Europe

September 29th, 2015

Israel is considering building a second offshore LNG terminal in order to reduce risks to local power generation and increase its energy security. According to the business daily Calcalist, the idea was floated last week at a meeting headed by Energy Minister Yuval Steinitz. The Energy Ministry is interested in doubling the number of LNG cargo Israel can receive.

Currently there is one offshore LNG terminal that is supplied by a regasification ship that loads LNG from a vessel anchored further from the shore. That LNG is used only during peak electricity demand, as happened a few weeks ago at the height of summer, or during emergencies, a situation that has yet to materialize.

However the expected delay of at least 3 years in the development of Leviathan has compelled Israeli officials to think of an alternative to increasing Israel's energy security. Currently gas is supplied only from the Tamar field through one pipeline and one entry point. According to Mr. Steinitz, that is grave danger to gas supply and power generation in the country.

The cost of building a new offshore LNG terminal is estimated at $500 million, while keeping an FSRU ship on standby and an LNG ship for supply is also an expensive operation.

In 2013, Israel Electric Corporation posted a loss of $24 million when it had to resell LNG cargo it did not need. A top IEC official the company lost $700 million up until the end of 2014 on consumption of only 1-2 BCM in LNG, according to the business daily Globes. Those were probably among the most expensive LNG shipments ever.

SOURCE

Conclusions on ENI's Zohr discovery should wait until January, says expert | Natural Gas Europe

September 24th, 2015

CONCLUSIONS ON ENI'S ZOHR DISCOVERY SHOULD WAIT UNTIL JANUARY, SAYS EXPERT

Natural Gas Europe had the pleasure to speak with Theodoros Tsakiris, Assistant Professor for the Geopolitics and Economics of Hydrocarbons at the University of Nicosia, and South Europe Programme Associate LSE IDEAS at London School of Economics. 

We spoke about how ENI’s discovery is changing the regional balance, and what the critical aspects are to keep in mind - geopolitics and prices first. “It is not clear if these prices are sufficient to justify the cost of production and delivery of Zohr's gas to Egypt and it is also not clear whether these July 2014 higher prices will be sustainable over the long run given the critical situation of the economy and the country's continuing - although manageable - political upheaval” he said, also making the case for a coordination of Cyprus, Egypt and Israel. He concludes claiming that there are several export alternatives for Eastern Mediterranean gas - pipeline to Italy through Crete, LNG terminal in Cyprus, LNG exports from Egypt’s idle terminals or exports to Turkey - but all of them are somehow critical. 

How does ENI’s Zohr discovery off Egypt alter regional dynamics? In other words, will the discovery have any impact on regional gas deals, and ties in the Eastern Mediterranean? Which country will be affected the most?

The initial estimates of the Zohr field indicate the existence of an in situ potential reserve close to 30 Tcf (trillion cubic feet). If this estimate is confirmed by the upcoming assessment drilling scheduled for January - although more drillings are likely to be required for a field of that size - then ENI would have made the largest gas discovery ever made in the Eastern Med that would equal the entire Israeli reserves basis. Such a discovery will be developed over a phased time period lasting over several decades but the initiation of production is neither imminent nor assured given the current domestic prices conditions in the Egyptian gas market and the potential cost of upstream development for a discovery which is not yet confirmed.

What’s your reading of the situation? How do you see other companies’ involvement?

The size of the potential discovery suggests that ENI may not be the only developer and could share the risks and rewards with other Majors and Super-Majors already active in Egypt's Exclusive Economic Zone such as BP and Total. It is unlikely that any meaningful production would start from Zohr before 2020 at the earliest so the impact is not direct for these fields who are already producing gas and would be competing with Zohr for Egypt's domestic market. Unfortunately for Leviathan's developers and even more unfortunately for Cyprus, the only consortium still able to make immediate use of Egypt's existing and prospective domestic gas demand as well as the country's under-utilised LNG facilities, is the Tamar consortium.

If Cairo decides to direct the entire production of Zohr to domestic consumption, then gas from Leviathan and Aphrodite would remain a competitive option for the owners of the Idku and Damietta LNG facilities. It is not yet clear what the Egyptian government would choose to do with Zohr despite statements to the contrary given the fact that BP has also made significant discoveries in the Nile Delta. Would Cairo also direct BP's entire production to domestic demand? How would the prospective privatisation of BG by Shell affect the corporate balance of power? These are also two questions which remain unclear and their answer would influence the direction of Zohr's development. Overall we should exercise patience.

Are there any political developments within Egypt we should look at? How are these developments related to prices?

The perception cultivated that Zohr is the golden bullet that would resolve all of Egypt's gas problems is inaccurate. Discovery of a deposit does not guarantee per se its monetisation. Discovery is not production. From January 2010 to January 2015 Egypt discovered 18 Tcf of gas, primarily in its offshore Nile Delta areas, but did not produce a single cubic meter of gas. Market prices in Egypt were too low to justify production. Al-Sisi made in July 2014 a courageous decision to partially curtail domestic gas subsidies increasing the price offered for new gas fields from $2,65/mbtu to $4,10/mbtu-$5,88/mbtu. It is not clear if these prices are sufficient to justify the cost of production and delivery of Zohr's gas to Egypt and it is also not clear whether these July 2014 “higher” prices will be sustainable over the long run given the critical situation of the economy and the country's continuing - although manageable - political upheaval.

Turkish customers are willing to pay more. It comes as no surprise that experts converge more and more on the idea that the discovery increases the importance of Ankara in the region, as Israel could be forced to sell its gas to Turkey. Do you share this viewpoint? Some of these experts also told me that Israel’s ability to sell gas to Turkey depends on the resolution of the Gaza issue. Do you agree?

If Leviathan's developers do not get to export their gas to the LNG facilities of Idku and Damietta it is certain that the pressure they will put on the Israeli government to allow them to export their gas to Turkey will certainly increase. It is not clear that Mr. Netanyahu will succumb to that pressure which by the way predates Zohr's discovery. The domestic Israeli gas scene is not dominated by the gas companies. The way regulatory hurdles have delayed by almost 18 months the development of Leviathan - overturning in December 2014 a very mature deal for the export of gas to Jordan - is indicative of its complexity and the fact that the gas companies do not always get what they want. If the government allows Tamar a greater export quota so as to export “immediately” to Jordan and the Idku/Damietta LNGs then Leviathan could come on stream as a replacement of existing Tamar sales contracts to Israel's domestic market and follow a less aggressive development plan producing no more than 10bcm/y compared to the existing target of 16 bcm/y.

Do you see regional hurdles, apart from Gaza? Are there other geopolitical aspects in the region to take into consideration?

Even if the Israeli companies decided to sell their gas to Turkey tomorrow Mr.Erdogan is most likely to demand “reparations” for the Gaza Marine issue on behalf of the Palestinians but this is not the most important obstacle. In general, the most important obstacle is the non-resolution of the Israeli-Lebanese EEZ dispute and the non-resolution of the Cyprus Issues since the pipeline would have to cross also through the Cypriot EEZ. Therefore this project would have to overcome three very intransigent political problems before it can begin to materialise.

You are Greek and you worked for quite some time in Nicosia. What’s the Greek interest there? What’s the position of Nicosia? 

If Israel, Egypt and Cyprus or even if only Israel and Cyprus pool their known reserves in a single development plan an new 16 bcm/y-capacity LNG in either Israel or Cyprus could become a reality. Another more economically challenging but technically feasible option is a large 16 bcm/y gas pipeline across the Mediterranean Sea from Cyprus to Crete and then directly offshore to the Italian pipeline system bypassing mainland Greece. What I am saying is that there are other commercial options than the Turkish domestic market for Israeli gas exports including measures that would increase domestic Israeli demand.

Speaking about buyers, are Egypt and Jordan still Cyprus' main potential customers? How ENI’s Zohr discovery change the cards on the Cyrpus’ table? Is it good or bad news for Nicosia?

The discovery of Zohr presents a major challenge to Nicosia. Aphrodite is ideally placed to service the needs of the Egyptian facilities and Egypt's domestic market. Personally I do not think that Jordan is such a viable option given the small size of demand and its proximity to the Israeli pipeline system. Given the situation in the Sinai, Cypriot gas to Jordan would have to use the Israeli network and I do not think that the Israeli developers would make room for Cypriot gas when they can meet Jordanian demand entirely through Tamar or Leviathan. There is still a viable yet closing window of opportunity for the export of Aphrodite' gas to Egypt and I sincerely hope that Nicosia and the Cyprus Hydrocarbons Co. make the best out of this opportunity by moving ahead with due haste.

Several Italian newspapers recently wrote that ENI’s discovery could make the case for stronger ties between Cyprus, Israel and Egypt - something you somehow mentioned before. Can you elaborate on it?

I do agree with the above mentioned assessment in the sense that we now have more than enough gas between the three Exclusive Economic Zones (EEZ) in the Eastern Med to build either a major underwater pipeline to Italy via Crete by promoting a plan slightly different than the existing route under study by DEPA and EDF/Edison or construct a 16 bcm/y LNG export facility in Cyprus. I do believe that there is the political good will and motivation to support the materialization of either or even both projects.

What are the obstacles there?

There are two obstacles. First, that there is a resurgence of EU gas demand and prices over the next five years. Second, we need a more serious EU engagement in the region that would also allow major EU companies already present in the region such as ENI, Gas Natural, BP, Shell and Total to pool resources and expertise so as to expedite the monetisation of very significant but also very expensive to develop resources.

Speaking about complicated processes and changes, could Cyprus sell gas to Turkey too? How long would the entire process take? Apart from the political and diplomatic issue, do you think there are also technical and financial hurdles?

From the moment the developers of Aphrodite or Leviathan sign a binding Sales Agreement with an importer they need at the very least 36 months to produce the necessary gas volumes and no one can accurately predict when an export agreement can be signed. With regards to Cypriot exports to Turkey, I believe Ankara has made it very clear that it would not want any Cypriot gas before the Cypriot issue is settled according to its own preferences. Even if the Cypriot problem would somehow be resolved tomorrow by some magical act I would not put all my small eggs in somebody else's very large basket. If Cyprus sells to Turkey it presently does not have enough gas to sell to anyone else and it would cover a very small portion of Turkish demand. Turkey has a multitude of importers and Cypriot gas would be very easy for her to replace. If there was a viable option to transit the gas via Turkey to Europe this could offer Cyprus some small level of export diversification but there isn't that there will not likely be in the near future given the fact that a. TANAP's current capacity is almost entirely booked for Azeri gas exports to Europe from Shah Deniz and b. that there is no pipeline to get the gas to Europe from the Greek-Turkish border since TAP is entirely dedicated to Shah Deniz and there is no Nabucco West on the table.

Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci

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 Natural Gas Europe welcomes all viewpoints. Should you wish to provide an alternative perspective on the above article, please contact editor@minoils.com  

Source: http://www.naturalgaseurope.com/conclusions-eni-zohr-egypt-should-wait-until-january-theodoros-tsakiris-25508

Egypt's Gift From God | Foreign Affairs

Egypt's Gift From God | What the Discovery of Offshore Gas Means for Cairo
By Yuri M. Zhukov

On August 30, the Italian state-controlled energy company Eni announced the discovery of a “supergiant” gas field off the coast of Egypt. According to initial assessments, the Zohr field contains 30 trillion cubic feet (Tcf) of natural gas (equivalent to 5.5 billion barrels of oil), making it the largest ever discovery of gas in the Mediterranean. This is welcome news for Egypt's struggling economy and fragile political situation. It also creates new challenges and opportunities for the country's neighbors and for outside powers such as Vladimir Putin's Russia. Additionally, it provides powerful economic incentives for Cypriot reunification. As the United States takes stock of what Egypt's good fortune means for the region, it should find much cause for celebration.


The Zohr field is the latest in a series of large offshore gas discoveries in the eastern Mediterranean. In 2009 and 2010, Israel celebrated the discovery of the Tamar and Leviathan fields, which together hold up to 26 Tcf of natural gas. Adjacent to Leviathan, in Cyprus' exclusive economic zone, lies the 7 Tcf Aphrodite field, discovered in 2011. Once developed, these deposits could satisfy both countries' domestic electricity needs for decades and open new opportunities for exports.

While its neighbors were experiencing a gas bonanza, Egypt fell on hard times. Historically the second-largest gas producer in Africa, with 77 Tcf of proven reserves, in recent years Egypt has become a net importer. With falling production unable to keep up with rapidly growing domestic demand, and political turmoil slowing exploration and investment, the country experienced regular power outages. Because the Hosni Mubarak and Mohamed Morsi regimes both fell during periods of regular power cuts, the government of President Abdel Fattah el-Sisi views these outages as a national security threat. To keep the lights on and quell potential unrest, Cairo has shifted energy from industry to residential areas, signed deals to import expensive liquefied natural gas (LNG), and accumulated a growing debt to foreign oil and gas companies.

Women carry gas cylinders to fill them at a distribution point in Cairo January, 2015.

Given this bleak backdrop, it is not surprising that one Egyptian politician described the Zohr discovery as a “gift from God.” The offshore field increases Egypt's existing gas reserves by almost 40 percent. Eni plans to fast-track the field's development, with drilling set to start in 2016 and production in 2017, putting Egypt on course to become energy independent by 2020. Because of relatively low development costs and abundant existing infrastructure, production can move ahead at a time of historically low energy prices.
Egypt faces a choice as to whether it should try to use Zohr's resources to reassert its place on the export market or simply keep the gas for domestic use. Unsurprisingly, on this point, Egypt and Eni disagree. Petroleum Ministry spokesman Hamdi Abdelaziz has emphasized that “all the production will go to internal consumption.” But Eni chief executive Claudio Descalzi has suggested that the field may also provide new supply options for Europe.

Even if it manages to overcome these challenges, Egypt will find itself entering an already overcrowded international market The domestic option has several advantages. Other than the need to build a new pipeline from the field to the Egyptian coast, the infrastructure requirements for domestic consumption are minimal, allowing Egypt to move the gas to market sooner. Output from Zohr would save Egypt at least $2 billion per year in fuel imports and help pay down the country's debts. Enhanced energy security should help increase political stability at home. That said, the temptation to export will be difficult for Egypt to ignore, with production at Zohr projected to exceed domestic demand by 2020. At that point, Eni will also begin to see the export market as potentially more lucrative.

An Israeli gas platform in the Mediterranean sea, some 15 miles (24 km) west of Ashdod, February, 2013.

Still, in contrast with the cheap-and-quick domestic option, bringing the gas to European markets would require a significant investment in infrastructure. There currently exist no pipeline routes connecting Egypt with mainland Europe, and new ones, presumably through Turkey, will need to pass through partially contested waters. The alternative is to reopen Egypt's dormant LNG shipping facilities. Exporting the gas by boat would give Egypt more flexibility in export routes and destinations, but the added costs of liquefaction, storage, transportation, and regasification could make Egyptian gas prices less competitive, particularly against cheap Russian gas in Europe. Even if it manages to overcome these challenges, Egypt will find itself entering an already overcrowded international market, on the heels of new discoveries in the United States, the lifting of sanctions on Iran, and stiff competition from major regional players such as Qatar. 

ISRAEL'S PLAN B

If the find is good news for Egypt, it will be less well received in Israel. Before Zohr's discovery, Israel had signed letters of intent to export about a quarter of Tamar's production and a significant proportion of Leviathan's to two LNG plants in Egypt and another deal to provide gas to Egyptian industrial companies. These exports were supposed to help pay for Leviathan's development, which has remained on hold since 2010 because of regulatory and political gridlock in Israel. Zohr has rendered such plans mostly moot, leaving Israel with one less market for exports and, potentially, a new regional competitor.

Jerusalem has thus started scrambling for a plan B. To export LNG by ship to European and Asian markets, Israel would need access to liquefaction facilities, such as those in Egypt. But if Egypt decides to export its own gas after meeting domestic demand in 2020, its two LNG plants will already be operating at full capacity, removing that option for Israel. The high price tag of building new LNG facilities from scratch in Israel would likely deter their construction at current oil prices. The alternative is to build a gas pipeline to Europe through Turkey. This route would need to pass through Cypriot waters, but Cyprus has so far opposed this option because of ongoing tensions with Ankara.

DIVIDED ISLE

Cyprus, too, has had a hard time bringing its offshore gas to market. The 2013 banking crisis slowed investment, and Nicosia's strategy for developing the Aphrodite field until recently centered on Egyptian exports. In February 2015, Cyprus signed a preliminary accord to deliver offshore gas to Egypt through a new undersea pipeline, with exports projected to begin in 2022. The Zohr discovery has effectively removed this option from further consideration.

By way of a plan B, Cyprus has two possibilities. First, it could develop LNG facilities jointly with Israel, but the economic viability of such a project is doubtful under present market conditions. Alternatively, Cyprus could sell gas to Europe via a pipeline through Turkey. Yet here, too, there are problems. Northern Cyprus, occupied by Turkey since 1974, claims co-ownership of the island's natural resources. Officially, Turkey does not recognize Cyprus' maritime boundaries and has challenged Nicosia's claim to the Aphrodite field. The prospects of a northern route—and any trade with Turkey—depend on whether ongoing talks between Greek and Turkish Cypriots result in the island's reunification.

MOSCOW'S MARKET

The Zohr discovery has raised hopes in some Western circles that the new supply options can help Europe reduce its energy dependence on Russia, which in 2013 accounted for 71 percent of gas imports to central and eastern Europe. Such an outcome is unlikely. Under the most optimistic scenario, Egyptian gas will not reach the European market for another seven to ten years. Even then, Egypt will not be able to shake Russia's market dominance. With total proven gas reserves of 1,680 Tcf, Russia exported about 5 Tcf to Europe in 2014 alone. Egypt cannot compete on that scale unless significantly more gas is found.

Although Russia does not see the Egyptian discovery as a major challenge to its energy strategy in Europe, Zohr does affect Russia in other, more localized ways. Along with Israel and Cyprus, Russia also stands to lose a gas export market, having recently signed an agreement to transfer 3.5 million tons of LNG to Egypt over two years. Yet Russia's interest in Egypt's domestic energy market reaches well beyond LNG. In late August, Putin announced Russia's participation in the construction of a nuclear power plant in Egypt, and Russian energy firms have been eyeing undersea pipeline construction contracts to help bring the Egyptian gas to shore. Since Western powers imposed sanctions on Russia over the conflict in Ukraine, Moscow has been actively courting Egypt as a potential economic and military partner. The new discoveries are more likely to reinforce than impede this approach. 

WELCOME NEWS

The United States has been a relatively minor player in current eastern Mediterranean affairs. After Sisi removed Morsi in a military coup in 2013, Washington kept Egypt's government at arm's length and has spent the last few years preoccupied with other challenges, such as the self-proclaimed Islamic State (also known as ISIS) in Iraq and Syria and Russian actions in Ukraine. Despite this relative disengagement, recent events have important ramifications for U.S. interests in the region, most of them quite positive.

New domestic energy supplies can help Egypt confront a growing Islamist insurgency in the Sinai peninsula more effectively First, the discovery of the Zohr field greatly enhances Egypt's energy security and Cairo's ability to provide public goods to a restive population. By reducing the potential for social unrest from power cuts and resulting economic shocks, new domestic energy supplies can help Egypt confront a growing Islamist insurgency in the Sinai peninsula more effectively and ultimately become a net exporter of security in the region.

Second, although Zohr presents a setback for Israel's energy strategy, the U.S. ally's long-term energy prospects remain bright. Exporting Israeli gas to Egyptian LNG installations was a controversial proposition from the start, and even if Leviathan's gas will serve only the domestic Israeli market, it will still ensure Israel's energy independence for several decades to come.

A fire on a gas pipeline west of the Mediterranean coastal town of al-Arish, North of Sinai, February, 2012.

Third, the Zohr discovery creates powerful economic incentives for Cypriot reunification. With exports to Egypt off the table, Nicosia's ability to develop the Aphrodite field will depend more than ever on rapprochement with Turkey and Northern Cyprus. If reunification talks succeed, Cyprus will also likely lift its opposition to an undersea pipeline route to Turkey from either Israel or Egypt. Even if eastern Mediterranean gas is insufficient to offset Russia's market dominance, the prospect of it reaching European markets through Turkey would be a boon for all parties involved, creating additional stakeholders for a unified Cyprus.

Finally, the scale of the new Egyptian gas deposits is a highly promising development for future gas exploration in the eastern Mediterranean. The possibility of new oil and gas discoveries in the region will enable littoral states to meet their domestic consumption needs more easily, while putting further downward pressure on global energy prices. An energy-abundant future may pose challenges of its own, but it is good news for the region’s economic and political stability. Washington should welcome the discovery of the Zohr field.

Source: https://www.foreignaffairs.com/articles/cyprus/2015-09-23/egypts-gift-god

Israeli Gas In The Aftermath Of ENI's Discovery In Egypt: Gaza Is Key | Natural Gas Europe

September 21st, 2015

ISRAELI GAS IN THE AFTERMATH OF ENI'S DISCOVERY IN EGYPT: GAZA IS KEY

Natural Gas Europe had the pleasure to speak with Amit Mor, CEO of Eco Energy Financial & Strategic Consulting, about Israeli gas and ENI’s discovery off Egypt. Mor concedes that the problem of Israeli gas is all political, explaining that the delays in the regulatory framework approval is impacting the country’s energy security, as well as companies’ prospects in the region. Nonetheless, Mor considers the Egypt’s option something still on the Israeli table. “There is room for exporting Israeli gas to Egypt in four years and possibly less” he said in our interview. He also underlined the importance of the situation in Gaza, which would increase the odds of Israeli gas exports to Turkey. 

The Israeli Parliament has been discussing the regulatory framework for gas operations offshore Israel. Did the Parliament make any reference to Egypt, or is the discussion simply a political game?

The gas policy became a purely domestic political issue. It is the opposition versus Netanyahu. Although ENI’s discovery has been discussed, it is not part of the political debate. 

What's your view on the latest developments?

The Knesset, the Israeli Parliament, recently approved the proposed outline, which is important but rather have a symbolic meaning. Nevertheless, Prime Minister Netanyahu withdrew the government request from the Knesset to approve the transfer of authority to bypass antitrust decisions from the Minister of Economy to the Cabinet, since he would not have a majority for that. Therefore the natural gas outline cannot go ahead the regulatory deadlock still prevails.

We heard that Noble Energy threatened the Israeli government to go to arbitration against Israel in case there isn’t a law coming out. Is it simply a threat or something more? 

The delays already caused major damages to the Israeli economy and also to the oil and gas companies, which can not sign export agreements with companies like BG, Union Fenosa and the Jordanian Electricity Company. The gas in Tamar and Leviathan fields could have now been transferred to and exported through the idle LNG plants in Egypt. Thus, it is a major loss for the Israeli economy, for the companies and especially it is a major threat to the Israeli energy national security, because currently 60% of the power is generated by gas that is supplied from one field -  the Tamar field, and, in case of damages to the infrastructures currently in use, the Israelis and Palestinians alike would sit in the dark.  

You are saying that Noble Energy’s position is legitimate. Right? What would be an eventual timeline for the international arbitration? When will a decision be made? What are the eventual steps that Noble Energy might take? 

I don’t know and I hope that this possibility will not materialise and eventually the Israeli parliament will come to terms, and the government will be able to achieve majority and solve this ironical political loop. 

Do you think that there is still room for Israeli and Egypt in the gas sphere. In case, don’t you think that ENI’s discovery calls into question Israeli attractiveness as a natural gas supplier? At least for Egypt?

Egypt has about 70 Tcf of proven reserves that have not been developed yet. The Zohr discovery is an important addition to their reserve. However, it will take several years to solve the major natural gas shortage in the country. So I think there is still room for cooperation and possible export of Israeli gas via the LNG facilities in Egypt. Egypt could also consume some gas from Israel, as it is now buying more expensive LNG - at around 10 dollars per Million Btu. So I think there is still room for cooperation. Also looking at the timeline, there is room for exporting Israeli gas to Egypt in four years and possibly less. There are still commercial possibilities, but we have to keep in mind that energy and natural gas markets are very dynamic. In general, there is room for export to Egypt, to Jordan, to the Palestinian Authority, and possibly in the longer run also to Turkey and Europe.  

You just mentioned Turkey. Do you think Turkey could be the number one alternative? Some commentators are speaking about a geopolitical convergence between Turkey and Israel. Do you agree? Do you think Ankara is a feasible option for Tel Aviv? 

I think Turkey is a most economically viable market for Israeli gas, and more generally for East Mediterranean gas. According to their and our forecast, Turkey’s gas demand is expected to increase significantly in the coming decade. They are trying to decrease dependence on Russian gas. On a political level, we understand that President Erdoğan is in favour of Turkey importing Israeli gas. Nevertheless, I think that an upgrade of the bilateral relations is required to promote the natural gas trade between Israel and Turkey. Hopefully, natural gas export might facilitate decisions regarding the upgrade of the bilateral relations.

In case the Turkish Stream project did not go through, would the gas trade be more likely? In other words, do you think Ankara would look at Israel in case it had more problems agreeing on the project bringing Russian gas to Turkey?

In the gas sector, geopolitical considerations usually come before economic ones. At the same time, major projects could facilitate the enhancement of geopolitical relations. Erdoğan’s opposition to Israel is mainly related to the Palestinian-Israeli relations and the situation in Gaza - he supports Hamas. It is possible that progresses in the reconstruction of Gaza will create the conditions for Israel and Turkey to upgrade their bilateral relations and facilitate gas trade. 

In conclusion, what are the elements to take into consideration? We know that the Parliament is discussing the legal framework. We know that Noble Energy might be considering legal actions against Israel. What are the next events we should look at?

First, we need to see the domestic regulatory issues being solved; this will enable the gas companies to develop the fields. Without this regulation in place, I don’t see any progress.

You are saying: all the eyes on the Parliament. Right?

The Parliament is important, but it is likely that there could be other internal regulatory solutions.

Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci

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 Natural Gas Europe welcomes all viewpoints. Should you wish to provide an alternative perspective on the above article, please contact editor@minoils.com  

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Source: http://www.naturalgaseurope.com/interview-amit-mor-israeli-gas-aftermath-eni-discovery-in-egypt-gaza-is-key-25351?utm_source=Natural+Gas+Europe+Newsletter&utm_campaign=de36a26196-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_c95c702d4c-de36a26196-307781293

TAMAR REPRESENTATIVE IN TALKS WITH UNION FENOSA GAS | Natural Gas Europe

September 21st, 2015

TAMAR REPRESENTATIVE IN TALKS WITH UNION FENOSA GAS

A delegation representing the partners in Israel’s offshore Tamar gas field met last week in London with representatives of Union Fenosa Gas and BG to discuss the MOUs signed between the partners of Israel’s largest offshore fields and the operators of Egypt’s offshore LNG terminals. The MOUs, signed a year ago, are not binding agreements to export gas from Israel’s offshore natural gas fields to Egypt’s LNG facilities.

Because of the uncertainty concerning BG's situation, negotiations with UFG were more detailed and more advanced. The two main project partners, Delek Drilling and Noble Energy are expecting the contract to be completed and signed within a month from the final approval of the natural gas framework by the Israeli government. It's still unclear when that will happen. Israeli politicians and bureaucrats are currently in a recess because of the Jewish holidays season, that will end early next month.

The Israeli Parliament approved earlier in the month the natural gas framework. However this approval will only be final once ratified by Israel’s Antitrust authority or its Economy Minister on the grounds of security interests. The Antitrust Authority is currently operating without a general director following the resignation of Mr David Gilo, its former commissioner, due to his objection to the natural gas framework. The Economy Minister is also refusing to bypass the Antitrust authority. 

According to the framework, partners in the Tamar gas field will be allowed to export natural gas from Tamar despite a prior government resolution that has designated Tamar gas field as a strategic asset and stated that exports from Tamar will be only permitted after the development of Leviathan is completed, including the infrastructure linking the field to Israel’s shore. Tamar is currently the only gas field that supplies Israel with natural gas via one pipeline.

In the MOU signed between the Tamar partners and UFG it was agreed that UFG will buy 70 BCM or about 20% capacity for an estimated amount of $70 billion over the period of 15 years. However, since signing the MOU, the prices of oil, followed by those of natural gas, have dropped by at least 50% and there were quite a few other changes in the natural gas marketplace.

If a final agreement is reached, the Tamar partners will have to invest about $1.5 billion in new production facilities and a pipeline. Natural gas from Tamar will be delivered to UFG from a rig in the Mediterranean and will be streamed to the Damietta liquefaction facility in Egypt. UFG then will be in a position to export the LNG to Europe.

Source: http://www.naturalgaseurope.com/tamar-representative-in-talks-with-ufg-25519?utm_source=Natural+Gas+Europe+Newsletter&utm_campaign=de36a26196-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_c95c702d4c-de36a26196-307781293

A strategic plan for a Cyprus gas hub | in-cyprus.com (Cyprus Weekly)

20/09/2015Adam Lomas

The recent discovery in Egyptian waters by Eni of a (currently estimated) 30 trillion cubic feet (tcf) in the Zohr natural gas field has prompted a range of reactions in the Cyprus press.

The earliest commentaries suggested that this was the end of Cyprus’ dreams of producing gas from the offshore Aphrodite field and that plans recently announced to sell Aphrodite gas to Egypt for processing in their (idle) liquefied natural gas (LNG) plants would also be abandoned. However, the Ministry of Energy was quick to confirm that talks were still on-going.

The subsequent visits by emissaries from both Israel and Egypt to Cyprus would certainly suggest that the cooperation between the three countries is considered important enough to continue.

We are encouraged by the president’s recent comments, which suggest that he is embracing the strategic goal of Cyprus becoming a regional hydrocarbons hub and linking the solution of the Cyprus problem to the economic benefits of hydrocarbons production.

Significance of the Zohr discovery

We should therefore examine just how significant the recent discovery is and what effect this has on Cyprus’ plans.

According to the well and geophysical data (so far) available, the field could hold a potential of 30 tcf of lean gas in place, therefore representing one of the world’s larger natural gas finds. The Zohr 1 field is close to the border and adjacent to Block 11 in the Cyprus Exclusive Economic Zone (EEZ).

According to the well and seismic information available, the discovery could hold a potential 5.5 billion barrels of oil equivalent in place covering an area of about 100 square kilometres. Zohr 1, at 4,757 feet of water depth, is the largest gas discovery ever made in Egypt and in the Mediterranean Sea and could become one of the world’s largest natural gas finds.

This exploration success will make a major contribution to satisfying Egypt’s natural gas demand for decades. Eni will in all probability immediately appraise the field with the aim of accelerating a fast track development.

Meaning of Zohr for Cyprus

So what does this mean for Cyprus?
The discovery confirms the eastern Mediterranean as an important hydrocarbons province.
The find will encourage further exploration within Cyprus EEZ, and we would expect Total to quickly re-examine its decision to withdraw, since its Block 11 is potentially part of the same geological play.
The success in Zohr will encourage Eni to explore further in the area and may accelerate its plans to explore its acreage in Cyprus waters, despite its recent disappointments.
There may be an extension of the Zohr field into Cyprus EEZ, but this will take some time to assess and early suggestions that we may be in for a 15% ‘windfall’ are exaggerated.

The most important impact for Cyprus in our view, is that it gives even more credence to the proposal to create a hydrocarbons hub in Cyprus. Such a hub will do the following:

*Provide a safe alternative for gas export to Europe.
*Provide a base for international companies to provide drilling and auxiliary (shipping) services to the region and a long-term economic benefit to Cyprus even if we do not develop Aphrodite in the short term.
*Kickstart the hydrocarbons economy in Cyprus, based on the interim gas proposals, which have recently been announced.
*Provide a raison d’être for examining the further education infrastructure in Cyprus and preparing the next generation to become the hydrocarbon workforce for the region and beyond.

Strategic plan for a hub

In order to achieve these goals and provide employment and economic growth at a time when Cyprus is slowly emerging from the recent financial crises, we believe that it is essential that a clear strategic plan for such a hydrocarbons hub emerges, which provides clarity for international investors and encourages them to invest in the future role of Cyprus as a the gateway for trapped gas in the eastern Mediterranean and beyond to Europe.

The production of such a plan is now essential to demonstrate Cyprus’ determination to make use of this opportunity, and we believe that such a plan will quickly provide the assurances needed for investors (including the EU infrastructure funds) to look more closely at significant contributions.

Meanwhile, talks continue on the future of the Aphrodite field, complicated by Noble’s on-going discussions with the Israeli government on the insistence by the regulator that Noble’s monopolistic position be reduced.

We understand that several companies are interested in acquiring Noble’s share in the Aphrodite field, and this will no doubt influence the timing of any decision on the development of Aphrodite.

We understand that a ‘field development plan’ is on the table at the ministry and the Cyprus Hydrocarbons Company but experts will no doubt still be analysing how best to bring the gas to shore, since the development plan envisaged by Noble only brings it to the surface.

The costs of individually collecting all the gas in the Eastern Mediterranean may well prove prohibitive at current prices, and analysts do not expect an early return to higher oil prices given the advent of Iranian production and Saudi Arabia’s determination to maintain market share.

This is one more reason why a strategic plan to gather the gas with an infrastructure based on a hub in Cyprus makes excellent long term sense. We hope that the will to provide such a plan will become reality.

Adam Lomas is Managing Director of Castor and Partners

Source: http://in-cyprus.com/strategic-plan-cyprus-gas-hub/

Messages from Europe - IN CYPRUS / CYPRUS WEEKLY

incyprus — 19/09/2015
By Charles Ellinas

We had some powerful messages coming out of meetings in Berlin and Brussels this week.

As a follow-up to the East Med regional expert workshops organised by the Friedrich-Ebert-Stiftung (FES) Foundation and PRIO in Nicosia and Istanbul, and reported in the Cyprus Weekly last June, high-level meetings took place this week in Berlin and Brussels.

These included industry, the Federal Ministry for Economic Affairs and Energy, the Federal Chancellery and the Ministry of Foreign Affairs in Berlin, and MEPs at the European Parliament, EU Directorate General for Neighbourhood Policy and Enlargement, Directorate General for Energy, European External Action Service, the Norwegian Embassy and a number of think tanks in Brussels.

The key message to Berlin and Brussels was that the European Union should recognise the East Med as an important source of hydrocarbons for Europe and assist the countries of the region to cooperate in order to achieve this.

In a regional environment of rapidly changing realities, there is a sense of urgency for regional platforms of dialogue, including civil society in addition to regional governments, to contribute to the social and economic welfare of the local populations and the protection of the regional environment.

A number of important and sometimes surprising messages came out of these meetings which are discussed in the remainder of this article.

Messages from Berlin

There was considerable interest from EoN and BP to see gas from the East Med exported to Europe through the Southern Corridor pipeline. However, timing is important.

Delay the decision making process and the opportunity may not be there in a few years. Gas consumption in Europe is not actually increasing, due the push to renewables led by Germany.

But Europe still needs to replace the depletion of indigenous gas resources in the North Sea and the Netherlands. This, combined with the drive in Europe to diversify supplies, has created opportunities but there are currently many competing sources of gas to fill this gap.

These include piped gas from Russia, the Caspian region, Iran, North Africa and LNG from North America. It will not take long before the European gas markets are saturated, leaving no room for East Med gas.

This demand may not be there in three-five years. East Med gas is not a priority for western Europe’s energy needs.

The other major factor is prices. Gas markets are changing rapidly.

Russia has now lowered its gas prices to Europe down to about $6.2 per mmBTU, as a result of oil price indexation.

East Med gas will have to compete with cheap gas if it is to gain an entry into Europe. In the end when it comes to gas sales commercial realities prevail, not politics.

The German position is that the energy sector should be regulated by markets. State governments and the EU have no role in building infrastructure, gas trading or producing and delivering energy. These must be driven by industry.

Germany, and Europe, want diversification of supplies to reduce excessive dependence on Russia, but not to endanger the relationship, which they have found dependable even at difficult times.

There is awareness that lack of transparency in the region is feeding corruption and they are supportive of the Extractive Industries Transparency Initiative (EITI), but it is for countries in the region to adopt and apply.

With regards to safety of offshore oil and gas operations and protection of the environment the EU offshore directive should help but it needs to be adopted by all countries in the region, not just Cyprus.

Germany is interested in the East Med region, but mostly in terms of security and stability, and for political and economic reasons – not for its gas. They see gas as having a bridging function as they move to renewables – they have a target to achieve zero emissions by the end of this century.

There is no interest to import electricity from North Africa or the East Med to Europe – this is now overtaken by the switch to renewables. The focus for Germany is to empower countries to supply themselves with renewable energy.

Messages from Brussels
Energy security and climate change are the key issues. Gas is needed as a bridging resource as Europe moves to renewables. The EU supports regional cooperation and the area through which to achieve it could be energy.

The EU is ready to assist Cyprus to develop its hydrocarbons and even more so if gas can assist reconciliation. The possibility of a gas pipeline through Cyprus EEZ to Turkey, provided the Cyprus problem is resolved, to transport Israeli and Cypriot gas and feed the Southern Corridor is of interest and would support it.

Southern Corridor is a priority project. But East Med gas must be competitive against European gas prices, it must secure markets and meet time schedules.

They are following the recent developments in the region with the massive discovery by ENI in Egypt. ENI’s CEO Descalzi was in Brussels this week expounding his ambitious goals to turn Egypt into a regional energy hub.

But there was some scepticism that perhaps this may be a little bit too ambitious and commercial realities and the challenges in Egypt might temper what can be achieved. I was actually challenged to a bet on this, when I said ENI has the incentives to drive this project.

The East Med gas is attracting considerable interest from policy-makers in the EU, but in their view it still needs to be developed and mature. It is a region with major geopolitical challenges.

As such it is a region of top priority to the EU, not because of its gas but because of the need to achieve stability and cooperation in the development of this gas to satisfy regional demand and help regional economies. In this context the new gas discovery in Egypt should contribute to its self-sufficiency and possibly the resumption of LNG exports to generate additional revenue for the country.

Cooperation between Cyprus and Israel to develop their gas and possibly export it by pipeline to Turkey and Europe or as LNG should help regional stability.

Environmental issues are very important and require regional coordination to ensure the safety of offshore operations.

The EU offshore directive can help achieve this and in addition to Cyprus, the EU is assisting Lebanon and Israel in this direction. However, it is a regional issue and regional outreach strategies must evolve to achieve it.

Key messages
East Med gas is not a top priority for Europe. There is a market but it will not be available forever. Global gas markets are shifting rapidly, with supply outstripping demand, with LNG gaining ground and prices being very competitive.

If East Med wishes to join these markets it must secure firm gas sales and meet these competitive prices. The EU is politically very supportive of the Southern Corridor and this might provide an opportunity for the region to export its gas, but not at any price and at any time!

SOURCE