The recent natural gas agreement among Cyprus and Egypt challenge the “status quo” of the region
By Athanasios Pitatzis and Simos Trevezas
On Monday 16/02/2015 a joint statement was released by Cypriot Minister of Energy and Egyptian Minister of Petroleum which confirmed a memorandum of understanding (MOU) between Cyprus and Egypt.
The agreement establishes the cooperation and strengthens the friendly relations of the countries which main goal is the development and exploitation of Aphrodite gas field which is located in block 12.
Primary to the agreement is to be examined technically every possible solution in order to be constructed an immediate underwater pipeline which will directly connect the Aphrodite reservoir to Egypt. This actions have been authorized to be performed by Egyptian Natural Gas Holding Company (EGAS) and Cyprus Hydrocarbons Company (CHC) Ltd. Specifically, the Egyptian Minister Sherif Ismail has clarified that there will be further negotiations within the next six months for the prices of the imported gas.
The block 12 is part of Cyprus economic exclusive zone and it has been estimated to exist 4-7 trillion cubic feet (tcf). In October 2008, Noble Energy Company received the concession to explore and in August 2011 proceed on agreement for production sharing with the Cypriot government and also in cooperation with the Israeli Company Delek. Although, the promising reservoir is considered to bring profits to the island there are second thoughts about export development due to the fact that the Cypriot market demand is approximately 1 billion cubic meters per year which gives little space for exportation.
In the meanwhile, Delek Grope and Noble Energy have already signed agreements with the Spanish firm Union Fenosa in May and with the British Gas Group for providing LNG by Leviathan reservoir. One of the terms of the agreement is that if the Leviathan was not developed on schedule then it would be supplied by Aphrodite field and since the Leviathan has been frozen, the scenario seems to be realistic. It is up to Cypriot Government and the authorized exploration companies to decide the commerciality of the block.
The geopolitical extension of the agreement
This agreement for the commercial use of natural gas from block 12 of Aphrodite field through Egypt LNG facilities create new opportunities and standard figures for the parties of the agreement, the following:
This agreement for the commercial use of natural gas from block 12 of Aphrodite field through Egypt LNG facilities create new opportunities and standard figures for the parties of the agreement, the following:
- Egypt can protect the oil and gas facilities in the Cyprus EEZ for now and for the future
- Egypt and Cyprus close cooperation can establish a long term beneficial relationship
- Greece can benefit from this agreement and at last sigh an agreement with Cyprus and Egypt for establishing the exclusive economic zone of Greece
- Also Greece in cooperation with Egypt and Israel can help Cyprus with the protection of oil and gas facilities in the Cyprus EEZ. We must be aware that Greece with Israel possess the most advanced non-nuclear submarines in the world right now. Greece has already Papanikolis (S-120) (Type 214) and the last months went into service two new submarines Type 214 the Pipinos (S-121) and the Matrwzos (S-122)
- Egypt will import the next years Cyprus natural gas until to develop its own natural gas fields to stand the natural gas consumption
- Israel natural gas fields can promote for commercial use the Egypt LNG facilities
This agreement indicates political will on both sides for their oil and gas companies to cooperate and examine a solution for supply from Cyprus to Egypt.
Egypt is the security catalyst in the region
According to the international media if the situation in Libya extend the border of this country and involve in this fight and Egypt then the oil and gas facilities in East Med and in the future in the South Crete in Greece faces major security issues which can add extra costs to the development of the oil and gas resources of the region. Also we must be aware that security and political instability can be a factor of delaying the further development of the region as a hydrocarbon produce area of the world.
The previous week Egyptians sigh an agreement with France to buy new fight airplanes and one battle ship. This movement indicates the unrest prevailing in the political leadership of Egypt for the maritime security of the region.
Cyprus security contribution in the region
Cyprus must possess at least the necessary military tools to provide to the oil and gas companies the minimal security guarantee, this can be done through of the purchase of drones and small boats.
Greece security contribution in the region
Greece can provide one submarine and on Frigate for the maritime security of the region
South-East Med Security Force
Our suggestion is an agreement for maritime security between Israel, Cyprus, Greece and Egypt which can create a small military force with the contribution of each country. This small force can guarantee in the oil and gas companies which operates in the region safety and geopolitical stability.
As we can observe from the map above if Lebanon join forces with the other countries of the region then the security in the South – East Med can be permanent.
ENI and Noble Energy in cooperation with Greek Oil and Gas Companies
It is a great opportunity for the region if ENI and Noble Energy engage a long term relationship with Greek Oil and Gas companies such as Energean Oil and Gas, Hellenic Petroleum and Motor Oil for the development of the hydrocarbons in South – East Mediterranean.
Conclusion
The biggest problem in our region which concerns security issues is the two geopolitical holes Libya and Syria. Also Turkey is question taking into account the stance will hold in the above initiatives.
Finally if someone want to read a small update in Cyprus gas exploration and reserves, the two authors of this article published the previous month one small report about this subject during their MSc in Oil and Gas Technology in the TEI Eastern Macedonia and Thrace (Kavala), you can find this report in this link: https://www.scribd.com/doc/255242764/Cyprus-An-update-on-gas-exploration-and-reserves
Athanasios Pitatzis, Production and Management Engineer, Democritus University of Thrace, 2014-2015 Postgraduate student in TEI Eastern Macedonia and Thrace (Kavala) in the Masters of Science in Oil and Gas Technology (http://msc.petrotech.teikav.edu.gr/). I write articles on Greece within a variety of internet web portals in the fields of Geostrategy, Geoenergy and energy policy.
Simos Trevezas, Civil Engineer specialized in infrastructure works from ASPAITE, Postgraduate student in TEI Eastern Macedonia and Thrace (Kavala) in the Masters of Science in Oil and Gas Technology (http://msc.petrotech.teikav.edu.gr/)
References:
- Eni to increase Egyptian investment. http://www.cyprusgasnews.com/archives/7375/eni-to-increase-egyptian-investment/. Accessed February 24, 2015.
- Cyprus, Egypt sign MoU on gas export from Aphrodite reservoir – Israel News – Jerusalem Post. http://www.jpost.com/Israel-News/Cyprus-Egypt-sign-MoU-on-gas-export-from-Aphrodite-reservoir-391234. Accessed February 24, 2015.
- Cyprus, Egypt Sign Oil and Gas Agreement. http://www.goldnews.com.cy/en/energy/cyprus–egypt-sign-oil-and-gas-agreement. Accessed February 24, 2015.
- Egypt, Cyprus sign MoU to import natural gas: Cabinet – Daily News Egypt. http://www.dailynewsegypt.com/2015/02/16/egypt-cyprus-sign-mou-import-natural-gas-cabinet/. Accessed February 24, 2015.
- MOU inagurates energy cooperation between Cyprus and Egypt. http://www.naturalgaseurope.com/mou-between-cyprus-and-egypt-signed-in-cairo-a-milestone-towards-monetization-of-aphrodite.-22159. Accessed February 24, 2015.
Source: http://eiranews.com/index.php/en/open-forum/646-the-recent-agreement-among-cyprus-and-egypt-for-the-natural-gas-challenge-the-status-quo-of-the-region
