Egypt, Greece, Cyprus: Partnership amid economic political difficulties?
Establishing Palestinian state is important for launching regional body that deals with gas exploration, says Cypriot analyst
Ahmed Abbas December 12, 2015
A second trilateral meeting between Egypt, Greece and Cyprus was held last Wednesday in Athens, and a joint collaboration between the three countries is being shaped.
The gas explorations in the eastern Mediterranean have resulted in crucial discoveries for the three states, especially Egypt, as it is in dire need of an economical boast, and Greece, which is still suffering from the economic crisis. Moreover, forming an ally in the face of Turkish policies in the region may be also a target of this alliance.
These have been floated as the foremost potentials, as experts speculate on the strategic importance of this alliance, and the time at which it comes. George Filis, Adjunct Professor of European Affairs at the American College of Greece, believes this alliance is important for both geo-economic and geo-political reasons.
Geo-economic collaboration
In August 2015, the Italian company Eni announced the discovery of a giant natural gas deposit in the deep waters of Egypt. The discovery could hold a potential of 30tr cubic feet of gas on an area of about 100 sqkm. The Zohr reserve is the largest gas discovery ever made in Egypt and in the Mediterranean Sea, according to Eni.
In the same year, Noble Energy, which is responsible for exploration of hydrocarbons in Block 12 of Cyprus’ Exclusive Economic Zone, announced the discovery of the Aphrodite natural gas field.
Filis believes that the discovery of the super-giant natural gas deposit (Zohr) in the Egyptian Exclusive Economic Zone (EEZ) could be a game-changer in the energy developments of the region, while it might reorient the plans and priorities of both Cairo and other stakeholders.
“This discovery, in combination with the recent developments and findings in the Cypriot EEZ (Aphrodite deposit), along with the fact that the newfound Egyptian deposit is very close to the Cypriot EEZ, increases the probability of discovering something similar on the other side of the maritime borders. Greece’s preparations of for the conduction of similar explorations in the region south of Crete and in the Ionian Sea make the demand for cooperation and coordination urgent and natural,” Filis told Daily News Egypt.
Discussion are being held between Nicosia and Cairo regarding the possibility of transporting Cypriot natural gas to existing Egyptian facilities for further processing, and exports are moving in this direction. This could increase Greece’s importance as an emerging regional energy hub through the full materialisation of the potentials of the Trans-Adriatic Pipeline (TAP) project.
“This means Greece will need to secure extra natural gas quantities (LNG or conventional), a part of which might come from Cyprus and Egypt,” Filis added.
The gas explorations in the eastern Mediterranean cannot be handled by one country, according to Marios Evriviades, Cypriot professor of International and European Relations.
“No country can take on all of these explorations on its own; it is an area that everybody can claim. This is why they are in collaboration to identify the economic zones,” Evriviades told Daily News Egypt.
He added that the three countries are trying to establish a regional body towards everybody’s benefit. Since Greece and Cyprus are EU members, they are required to follow the EU regulations regarding forming such bodies, and this body may work under the EU laws, according to Evriviades.
Cyprus has also signed treaties with Israel and Lebanon regarding the borders of its exclusive economic zone. The Israeli Leviathan gas field is only 21 miles away from the Cypriot Aphrodite. Thereby, Evriviades believes that both Israel and Lebanon may join this cooperation. “If a regional body is established between Egypt, Greece and Cyprus, Israel may join because it has interests,” he said.
Abdul Monem Saeed, head of the Regional Centre for Strategic Studies, believes the cooperation among the three countries tips in Egypt’s favour since it is currently facing major economic problems.
“The three countries have large opportunities to benefit from this cooperation through the exchange of experience, as each one of the countries has great expertise in a certain field. To avoid the cooperation’s failure, they must divide the resources among them and prevent any other side from intervening in their affairs,” Saeed told Daily News Egypt.
The Athens Declaration announced during the meeting, along with the clear official statements by the three country’s leaders, set a solid basis for more organised and regulated cooperation on maritime and energy policies. The creation of the joint structures, and the fact that all leaders underlined their willingness that their next meeting in Cairo will be accompanied with tangible steps towards the practical materialisation of the agreement, affirm the certainty surrounding the collaboration.
Do borders pose a problem?
While media reports said Egypt and Greece may take time to agree on maritime borderlines, Saeed does not believe this will be a problem.
“No conflicts are expected among the three countries due to the presence of certain principles articulated in international law that must be followed in such coalitions. I believe the three countries are fully aware of these principles,” he said.
For Cyprus, the borders with Egypt and Israel have already been identified, but Evriviades believes the Gaza Strip’s maritime borders are more problematic. “Gaza strip has its own sea borders, and I think Egypt, Cyprus and Israel accept that,” he said. He added that any cooperation body must take into consideration the interests of Palestinian authorities.
Egyptian President Abdel Fattah Al-Sisi and Greek Prime minister Alexis Tsipras spoke of the importance of a two-state solution to the Palestinian case. Evriviades believes this fits into the framework of establishing a regional body that deals with gas exploration.
He added that any cooperation in this area will empower Palestinians, as they will be given the facilities to explore gas and participate in this regional body. “I think the international community will accept this,” he said.
Collaboration crucial to help post-crisis Greece
For the last seven years, Greece has experienced a tremendous economic devastation that is unprecedented for a developed country and economy during peace-time. Despite this, Greece is utilising its tremendous human and capital resources. Its unmatched economic potentials due to its geographical positioning and the entrepreneurial nature of its people demonstrates a societal cohesion that only a nation with the history, tradition and roots of the Greek people could comprehend and safeguard, Filis believes.
However, the danger, not just for Greece but for the EU as whole, has not passed. “Immigration and refugee flows, the neo-protectionist measures of many of our European colleagues along with the rise of extreme-right and/or extreme-left ideologies (especially the former) create a situation which destabilises the EU as a whole and puts the European integration project into question,” he continued.
“Within this framework, Greece should act as a paradigm for resilience for all the countries of the region. Moreover, the geographic advantage of the country, along with the existing state-of-the-art infrastructures, might enable neighbouring countries –like Egypt- to use Greece as a transportation and commercial hub, as a reliable energy partner for exporting natural gas to the EU, and of course as a valuable colleague for know-how transfer and high technology projects,” Filis said.
The cooperation will also create new job opportunities for young Greeks, and this will reduce unemployment rates, he noted.
According to Filis, post-crisis Greece has a lot to offer, both in material and in intellectual terms, to all the countries and the companies that comprehend these potentials and benefits. Moreover, as the Athens Declaration signed after the tripartite meeting states, the three countries are about to establish a standing Joint Committee of Cooperation aiming to “formulate, develop, and promote practical projects of trilateral interest”.
Geopolitical cooperation: An alliance against Turkey?
Focusing on the Greek point of view, the timing for the development of a strategic alliance with Cairo is crucial. “Our countries right now constitute the main pillars of stability in the broader region that I define it as the water axis of the Black Sea – Straits – Aegean – Eastern Mediterranean (BSSAEM),” Filis said.
“In purely geopolitical terms, Greece and Cyprus need Egypt, and Egypt needs Athens and Nicosia as a base of reference, reliance and certainty in an era of turbulence, instability and uncertainty,” he added.
The basic threats that Greece and Cyprus face are common with Cairo’s issues of major concern. The most important regional threat for Greece and Cyprus are the neo-Ottoman aspirations of a revisionist and aggressive Turkey that tries to challenge the status in both of the Aegean and the eastern Mediterranean. Filis believes Ankara’s dubious policies regarding combating “Islamic State” and its unacceptable practices regarding the unprovoked attack on a Russian air force aircraft in Syria, as well as its intrusion into the Iraqi sovereign space near Mosul, prove that Turkey, at least its current political elite, is not part of the solution for the chaos in the region, but rather part of the problem.
As such, “deterring a revisionist imperialist Turkey in the Eastern Mediterranean and combating terrorism, and its supporters, in the broader area constitute a top priority to Greece, Cyprus and Egypt, a reality which offers the necessary common interest to bring together our countries and forge a strategic alliance, which will become the new point of reference in the eastern Mediterranean,” Filis said.
Saeed believes the cooperation between Egypt, Greece and Cyprus aims to address the Turkish policies in the region “especially as dealing with Turkish situation requires coalitions, as well as helping Egypt determine the marine boarders to discover gas and petroleum in the Mediterranean Sea”.
However, Evriviades believes Turkey would be welcomed if it decided to join this coalition, provided that it follows international law. “The problem of Turkey is that it wants to play according to its own rules,” Evriviades said. He believes when the three leaders said they welcome any country to join the cooperation, provided that it accepts international law, they may be referring to Turkey.
“Turkey is in our interest, because we want stability, but stability that is based on balance, and not one that comes out of aggression,” he said. Turkey must change its policies before it can join according to him.
More positive economy, more stability
The most efficient and effective energy scheme should be utilised in order for all the parties to reap the benefits of this cooperation, according to Filis.”Greece and Cyprus could act as the best ally in the EU for Egypt and might support and contribute to the further enhancement of Cairo’s relations with Brussels. “Cairo could attract Greek investments and human capital,” he said.
Meanwhile, Evriviades believes that the interests of both Greece and Cyprus support a strong stable Egypt, and to achieve this, the three countries should work to enhance their economies.
Source
EMC 2021 . 2021 SEPT 14-16 . NICOSIA
Saturday, December 12, 2015
Egypt, Greece, Cyprus: Partnership amid economic political difficulties? | Daily News Egypt
Friday, December 11, 2015
Weekly Overview On Eastern Mediterranean Natural Gas Matters | Natural Gas Europe
December 11th, 2015
A new row between Israel and Egypt
The past week was tensed in the Eastern Mediterranean as it was dominated by the news of a new row between Israel and Egypt. Last month' promising talks between the partners of Israel’s Leviathan and Egyptian company Dolphinus over the possibility of exporting gas from Israel to the Egyptian market via an undersea pipeline led to the signing of a Letter of Intent that would lead to a final export deal subject to regulatory approvals. This week saw however a sudden rift in the renewal of the energy relationship between the two countries following a ruling by arbitrators at the Paris International Chamber of Commerce ordering two Egyptian gas companies to pay $1.76 billion to state-owned Israel Electric Corporation to compensate it for the disruption in the flow of Egyptian gas to Israel in the aftermath of the Arab Spring in 2011 that toppled President Hosni Mubarak. As a result of the ruling, the Egyptian Government ordered the immediate halting of gas negotiations with Israel.
A new row between Israel and Egypt
The past week was tensed in the Eastern Mediterranean as it was dominated by the news of a new row between Israel and Egypt. Last month' promising talks between the partners of Israel’s Leviathan and Egyptian company Dolphinus over the possibility of exporting gas from Israel to the Egyptian market via an undersea pipeline led to the signing of a Letter of Intent that would lead to a final export deal subject to regulatory approvals. This week saw however a sudden rift in the renewal of the energy relationship between the two countries following a ruling by arbitrators at the Paris International Chamber of Commerce ordering two Egyptian gas companies to pay $1.76 billion to state-owned Israel Electric Corporation to compensate it for the disruption in the flow of Egyptian gas to Israel in the aftermath of the Arab Spring in 2011 that toppled President Hosni Mubarak. As a result of the ruling, the Egyptian Government ordered the immediate halting of gas negotiations with Israel.
Greece, Cyprus, Egypt to speed up talks over sea boundaries | Reuters
Fri Dec 11, 2015
ATHENS | BY ANGELIKI KOUTANTOU AND RENEE MALTEZOU | REUTERS/ALKIS KONSTANTINIDIS
Egyptian President Abdel Fattah al-Sisi, Greek Prime Minister Alexis Tsipras and Cypriot President Nikos Anastasiades met in Athens to discuss how they could take advantage of gas reserves especially after Egypt this year discovered the biggest offshore gas field in the Mediterranean.
"The discovery of significant hydrocarbon reserves in the east Mediterranean and at Zohr, can and must be a catalyst for wider regional cooperation," Anastasiades said after the third such summit since November 2014.
The leaders set up a joint committee to work on tourism, investment and energy projects. They will explore the potential for new pipelines in the region depending on the level of gas reserves found in the eastern Mediterranean, Tsipras said.
However, independent experts say most of the gas found off Cyprus, Israel and Egypt will go for domestic consumption and question whether there is sufficient to make a pipeline to Europe viable.
"A gas pipeline (or electric cable) from the Eastern Med to Greece, via Crete, and on to the Balkans and Eastern Europe is a non-starter on the basis of the quantities so far discovered," said Michael Leigh, head of the Eastern Mediterranean Energy Project at the German Marshall Fund think-tank.
The next summit will take place in Cairo next year.
"We aim to have visible and tangible results through the joint projects," Sisi said.
Maritime zones claimed by countries for commercial research, known as economic exploitation zones, are governed by the U.N. law of the sea or bilateral accords between neighboring states which normally settle on an equidistant boundary.
Cyprus, which is ethnically split between its Greek and Turkish Cypriot populations after a Turkish invasion in 1974, defined its economic zone in 2004 and since then its maritime boundaries with Egypt and Israel. It found gas offshore in 2011, in a move which has been challenged by Ankara.
Tsipras said defining sea borders was not aimed at excluding third countries - a veiled reference to Turkey, with which all three have prickly relations.
Anastasiades, who is trying to negotiate Cyprus settlement, said natural resources "should be a chance for cooperation and not confrontation" in the region.
"Our aim is not to exclude anyone," he said. "Our cooperation is not against anyone. Our energy sources can suffice for the needs of many Europeans and other neighbors."
Turkey and Greece, an EU member, have been at loggerheads for decades over land, air, sea and sea-floor borders in parts of the Aegean Sea. Egypt has been at odds with Turkey since Sisi led a military coup that ousted an elected Muslim Brotherhood president backed by Ankara in 2013.
(Additional reporting by Lefteris Karagiannopoulos; Editing by Paul Taylor and David Evans)
Wednesday, December 9, 2015
Noble Energy's (NBL) Management at Wells Fargo Energy Symposium (Transcript) | Seeking Alpha
Noble Energy's (NBL) Management at Wells Fargo Energy Symposium (Transcript)
Dec. 9, 2015 12:37 PM ET | About: Noble Energy, Inc. (NBL)
Noble Energy, Inc. (NYSE:NBL)
Wells Fargo Energy Symposium
December 9, 2015 9:30 AM ET
Executives
Ken Fisher - Executive Vice President & CFO
Brad Whitmarsh - Investor Relations
Megan Repine - Investor Relations
Analysts
Unidentified Analyst -
Operator
Good morning. Next up in stage we have Noble Energy. From management we got Ken Fisher, CFO. Brad Whitmarsh and Megan Repine, both from Investor Relations. Thank you very much.
Ken Fisher - Executive Vice President & CFODecember 8-9, 2015 for the Wells Fargo Securities 14th Annual Energy Symposium at the Waldorf Astoria in New York City |
Thank you, Joy. And it is pleasure to be here. Good morning, everyone. It is hard to believe that it is only three weeks left in 2015. It has been quite interesting year for the industry and by sense is 2016 will prove also interesting and challenging as we move forward. But the Noble team had the opportunity for a Board meeting yesterday and we did a recap of 2015. And I think we feel very good about where the company sits as we wrap 2015 and move into what will be challenging 2016. We clearly we made the call early this year that it was probably lower for longer and we've taken all the right actions. So both in terms of setting up the business plan for 2015 and activity levels in terms of the balance sheet and in terms of strengthening the portfolio. So as we look back on this year we've had the opportunity to add the Texas assets both the Eagle Ford and the Permian to the mix. I'll talk about those in a little bit. Definitely have reset the capital structure in terms of one of the cost structure in terms of capital cost and operating cost and took advantage of the Rosetta acquisition even on the G&A front to drive synergies there. We've enhanced our onshore business with the addition of the new assets and then we delivered as of early fourth quarter two new Gulf of Mexico oil projects that effectively doubled our production in the Gulf of Mexico as we enter 2016.
And then today we just earlier this morning we had announcement out in terms of updating our fourth quarter guidance strongly on the production momentum coming out of essentially all the assets across the portfolio and also some highlights of the value that Noble is bringing to the Texas assets in this case IP rate and completion technology improvement in the Eagle Ford as we promised with the addition of Rosetta. So it has been I think a very strong year. The other thing we've taken advantage of the opportunity with support from the Prime Minister in Israel to get a comprehensive gas framework that we expect to be in place here and operational within the next few weeks, and that sets us up to progress development in Eastern Mediterranean. And so we leave this year, last year the company was about 300,000 barrels a day per day production, this year we will end, exit well over 400,000 barrels a day. And that initial scale is a part of the cost of efficiency story. So how do we do this? Over the last 10 years we built an exceptional portfolio. The assets in each case are very well positioned on the industry supply curve. They are essentially all held by production and they offer significant investment flexibility which we saw both in play this year and you will see in play next year as we can have a lot of flexibility to deploy capital and control our activity levels and deliver nice returns in a challenging environment.
Diversity is a key; about 70% of our capital over the last few years has gone to the US onshore business offering even in current price attractive returns and the flexibility and low risk nature of that type of program. The dollars are going to DJ and our Texas assets. In terms of medium term type assets the Gulf of Mexico remains the focus and very attractive. The prolific natures of the wells and the oil content are providing a very nice addition to the mix as we move into 2016. And then I would also highlight the diversity of our long live west African and Eastern Mediterranean assets that enjoy in case of West Africa barn pricing in terms of Eastern Med long term gas pricing that's contractually set and not really provides more or less a natural hedge to oil prices. So the diversity in a portfolio serves us well. Also financial strength, we continue to maintain a strong balance sheet and liquidity and then I think the organizational effectiveness you will see really in play as we run one onshore business in the US, we are quickly able to integrate the Texas assets and then use the learnings from both the DJ and Marcellus to bring value those -- to those new additions to the portfolio.
This is a pretty impressive slide. As I said we call lower for log or earlier and the plan this year was to bring capital down through the year to be able to operate then in a cash flow natural basis with no more debt by late in the year. You can see clearly we've demonstrated we can do that and our discretionary cash flow now exceeding the capital spent in third quarter and that trend we expect to continue. In fact, capital was down on legacy basis about 45% this year and with recent announcement of capital guidance is tiding up capital guidance for the year. Essentially we have absorbed the Texas assets for half of the year and still deliver slightly less capital for the year. So again showing that I think the flexibility and the ability to respond to the portfolio. And then from an operating expense standpoint, at level we haven't seen since 2015 --excuse me prior to 2010 and 2015. So very good momentum on the resetting the cost structure and we view most of these is really very sustainable. Clearly we have taken opportunity for some pricing changes but a lot about this has been efficiency. The way we do work, our completion, application and completion technology and then leveraging the additional scale in terms of G&A type of efficiencies.
Financially remain strong. $5 million of liquidity at the end of third quarter, $1 billion in cash and then $4 billion undrawn credit facility. That facility was extended for two more years in a third quarter to 2020 at actually a lower borrowing rate and that sets us up so we have no near-term maturities. On the Rosetta acquisition we were reaffirmed on our rating and outlook. And then the hedge program has been a very successful program over the last decade. And provides about this year including what we acquired from Rosetta almost $1 billion of proceeds and then were set up for about just under $500 million in 2016 on the existing hedge book. So this has proven a very nice in a sense shock absorber and if you look back over a 10 years period, we've had really no year where we had any material or any actually even very few negative settlements in the good years. And in the cumulative bad years we've delivered almost $2 billion of hedge proceeds net. So it has been very successful program.
Moving to the assets now first the DJ which remains the lion share of our investment focus. We had the opportunity last week to do our quarterly look back and I would say very happy with performance. I'll show you the well cost data in a moment. But we continue to highlight this area from the capital standpoint. We are running now three rigs, this year we averaged 3.5 rigs which is down from 10 last year but we managed to drill with those 3.5 rigs 70% in the lateral feet we drilled last year. So significant improvement in terms of drilling efficiency, drilling days and then really leveraging the long lateral concept. Given our acreage position which is highly contiguous and the focus over the last year in Wells Ranch in East Pony, we managed to take the average lateral length per well up from to about 7,300 feet this year which is up over 2,000 feet from what it was in 2013. So very strong performance of the operations team. The concentration really being is again in Wells Ranch in East Pony which is high liquids content; Wells Ranch grew 15% in third quarter over 2Q and East Pony up 20%. And then additionally we brought on our infrastructure up in East Pony a new gas plant at Keota in the third quarter and that supporting the activity there and then Lucerne II plant started up in greater Wattenberg in the third quarter as well. So we are in good shape on infrastructure as we move into 2016 and 2017.
Well cost, you can see then capital efficiency coming through, well cost down substantially both in the Wells Ranch area and East Pony. When you look at it on an extended reach or normalized basis, you can see down essentially $3 million of well and this is prior to the application of slickwater fracs. Historically in these areas we have been with hybrid gel. So this year we did some work to look at slickwater primarily on a cost basis as originally thought and what we are seeing is the 10 plus percent cost reduction on top of the data I showed you on the prior page, but at the same time also then improvements in terms of production as well. So very good leverage in terms of continuing to enhance the completion technology.
So this data is from Wells Ranch and then we are also doing this now in the East Pony area. Moving to Texas, I think the acquisition closed on July 21 and we were very pleased to add these assets to the portfolio. This makes us one of only two companies with material positions in four of the top five US onshore basins. And for what we can see our acreage is in essentially the heart of these plays both in the Eagle Ford, Webb County and then in the Delaware Reeves County and this adds about 1,800 locations in a very conservative assessment of resource to the inventory. We are running one rig each now in the Eagle Ford and the Permian Delaware. And we are very pleased by the results including in the earnings announcement today, we had the initial results from the first three Noble completion designs in the Eagle Ford, very strong EURs up substantially on prior and then what we are also seeing is substantially lower drilling days both on our nine wells drilled to date in the Eagle Ford and then on our initial Permian well. And then as we move forward and Permian will be doing the first Noble completion and have results on that very shortly.
So we managed to integrate these assets very effectively. The integration effectively complete. They are part of our one US onshore business. Donnie Moore who spent over the last few years running the Marcellus very successfully is also picked up responsibility for the Texas assets and we managed to retain a lot of the operating team on the ground and so fully integrated and clearly delivering value from what Noble brings to the party.
Moving to Gulf of Mexico. As I mentioned then we brought on the Big Bend and Dantzler projects at the beginning of fourth quarter. They add about 20,000 barrels a day, 85% oil net to Noble and so that takes us up essentially doubles our production at the Gulf of Mexico as we move through 2016 and we will bring the gunflint project online in the middle of next year. And that adds at least 5,000 barrels a day net to Noble as well. And the nice thing about this is we are spending roughly $600 million this year in Gulf of Mexico so as that those projects complete and capital is essentially is non-recurring which help set us up very nicely for next year. We continue to like the Gulf of Mexico. Clearly it is an area where a lot of technology innovation comes into play. So it is also a very good calling card around the rest of world in terms of our expertise and success there. We have enjoyed a very good exploration success rate and given the focus on middle myosin prospects that are close to existing infrastructure, they can be brought on production very quickly. So this remains an area where we are very pleased to operate and you can see then on Big Bend, three years from discovery to production, Dantzler two years from discovery to production. So the ability to quickly deploy capital and really generate value quickly. And these are again oil projects very prolific reservoirs and come with a very nice cost structure.
Eastern Mediterranean. I would highlight number one today, till today we have 40 TCF of very high quality gas discovered, 25% of that gas is now on stream and producing. We have 1.2 Bcf a day a capacity at Tamar. It was fully dispatched in third quarter, for most of the quarter and had record production in August and near record in September. This is a very strong cash generating asset that has a 30 year life with essentially no follow on capital in terms of continue to produce up to 1.2 Bcf a day. So very nice asset and again is a bit of a hedge against oil price. Then over 50% of the gas in the region is that we discovered is upraised and flow tested. So essentially it is ready to contract. So 22 TCF at Leviathan. Then the regulatory framework, last Christmas we were not very pleased with the outcome from anti trust standpoint but what that's really catalyze then over this year is the ministries to get together for the first time ever on a coordinated basis and then some very strong support from the Prime Minister and the Energy Minister to get a gas framework in place. We expect that to be signed by the PM very shortly. And that really sets us up for the ability to move forward with development. And I'll talk about that in a minute. The other thing that we announced recently then was the BG team entering the Cyprus block. So we had held Cyprus at 70% and so they came in for half of our interest and we think that very much help set us up for future development in the basin.
The other message I think about Eastern Med is there is a lot more demand than there is supply right now. Existing latent demand is about 3 Bcf a day, that's currently unsatisfied as we look at the various projections and talk to people; we see that demand being as much as 6 Bcf a day by 2020 timeframe. So a substantial amount of demand. And what we've seen particularly now since the gas framework has been made public this summer, a big drive to continue from customers to contract gas. So clearly Egyptian industrial customers are not getting gas so there is strong drive there. Our partner Delek recently put some note about an industrial consortium warning gas and signing an LOI. Clearly we are continuing to work with the BG and union Fenosa teams on back filling, the three LNG trains that are currently not utilized and then also Jordanian customers in particular Nafco working with them on gas supply in the Jordan. So the plan forward as the gas framework is signed is to then contract gas, pick the development scenario, finalize the development scenario in terms of the facilities, do a re-bidding on the facilities and then also then close up project financing and then be able to take a sanction so I would expect probably by late 2016 that we are sanctioning projects for development. Then have anywhere from three to four year timeframe from sanction to production. So lot of progress there. Then we continue to remain very interested in exploration typically 10% to 15% of our capital each year goes to exploration. We see the current environment as an opportunity to add essentially low cost, low commitment exploration inventory which then provide optionality for the future. So we have both exploration and new venture team out looking very targeted at blocks around the world. And then in 2016 our exploration program will consist of the Rhea well in the Northern Falkland which will spuge shortly and this is a contentious target in the near Sea Lion discovery. So existing hydrocarbon system and we should have results on that in first quarter 2016. We are also about to move to another Gulf of Mexico exploration project at Silver Gate which again will probably be late first quarter early second quarter results in 2016. We will also appraise our Katmai discovery for development in the Gulf of Mexico kind of in the mid year timeframe and then probably another exploration well late in the year in 2016 in Gulf of Mexico.
So we remain committed to an active exploration program and actually see the current environment is probably a great opportunity to add to the long days of inventory.
So as we look forward in the 2016, we are existing 2015 with substantial momentum both in terms of cost structure, capital performance and production, gives us a lot of flexibility to manage in 2016 in a cash flow neutral basis. So that's clearly what since really the early fall we have been communicated will operate within our cash flow next year. We can do that at substantially lower capital than 2015 on pro forma basis and still have probably mid-single digit type of growth rate. We remain very flexible to move up if conditions and returns warrant. And I think we will prove very resilient regardless of the overall situation. And that we will continue to in a sense take advantage of the opportunities presented by the environment to drive the cost structure to really leverage the new assets that we picked up in Texas. And then also just keep the company strong as we move forward.
So we appreciate everybody's interest and time. I am happy to take any questions if you have any.
Question-and-Answer Session
Operator
[Operator Instructions]
Unidentified Analyst -
The hedging position in the slide was noted in 2015. How is that shape out for 2016? I know there is some in place but what's the kind of percentage -- [Multiple Speakers]
Ken Fisher - Executive Vice President & CFO
We are roughly 25% to 30% hedged at what are today very attractive prices so if the script would stay where it is, you would realize in the range of $450 million type proceeds next year. So provides again as I said not very nice shock absorber in a sense as commodity price have changed. And then we have -- as I said the Israel and the West African gas is contractually priced gas so that's another element and the portfolio is not exposed really directly to oil prices in the regard.
Unidentified Analyst -
And 25% to 30% is total production.
Ken Fisher - Executive Vice President & CFO
Total
Unidentified Analyst -
Okay. And then living in cash flow neutrality. That's true operating cash flow.
Ken Fisher - Executive Vice President & CFO
Yes. I mean what we would think of it is delivering the -- paying the bills, paying the dividend and not getting any more debt right.
Unidentified Analyst -
With regard to your cash flow neutrality and having underlined growth at $50 assuming if we are in $40 to $45 regime over the next two years say how is 2016 shaping up with your --
Ken Fisher - Executive Vice President & CFO
Yes. 2016-- that's what -- when I say that we can operate at lower capital than 2015 in 2016 materially lower capital and then grow mid single digits that 2016, i.e. 2016 and what we communicated earlier this fall was that we can bring our capital down into the range of 1.6, 1.7 from what essentially $3 billion this year and still deliver kind of mid single digit growth. And that's driven by very good momentum which is part of the message of the announcement this morning. And then the Gulf of Mexico project as I mentioned that is a significant addition to the oil mix for the company at the same time as the capital does not reoccur in that. And we feel good, we are very -- we don't have many capital commitments for next year. You know as I said most of our acreage is held by production. So we have full flexibility and we don't have big commitments that tie us down. So our flexibility is strong and that allows us to deploy capital in the best areas. So that's where the bulk of the dollars right now will go to the DJ, in the Wells Ranch and East Pony area. And then in Eagle Ford and really getting starting to development in the Permian.
Unidentified Analyst -
Decision making framework with regard to your capital outlay, could you just talk us through that.
Ken Fisher - Executive Vice President & CFO
Yes. That's a good question. I think the way we think about is first of all we want to have the gas contracts in place so you have volume underpin for the projects. That will allow us to select the concept, the design and given the quality of the reservoir, we can anywhere on the volume curve, it is a very economic project. So you can do a smaller project then they can be expanded or you can do a large project. So if you recognize Tamar supplying 1.2 -- up to 1.2 Bcf a day with five producing wells. So the quality of the reservoir is such that it makes it a very economic program and the Leviathan reservoir is an analog. So we have a lot of flexibility on what's the design size and then we will do a project finance so that will allow us essentially we call it a ring fence and we won't need new equity essentially in the Eastern Med, between the cash flows that exist there and a project financing we can fund the development. And we like the idea of leveraging perhaps export credit agencies and organizations like that to help underpin essentially the quality of the project. And then as I mentioned we hold those assets. We just in the process of divesting Tanin and Karish which is small fields that was related to the anti trust approval. So adds a little bit of proceeds to BG, entering the Cyprus now we bring this to an appropriate level of ownership at 35% but also generating some proceeds and clearly brings a lot of future value. If you look at our Tamar interest is 36% today. And then we operate, we've agreed over six years to be able to sell down 11% commitments there. If you look through the value of that in terms of our partner, our publicly traded partner, it is a very attractive asset in terms of valuation given it is long life, cash flow and non no further capital requirement to maintain existing capacity for essentially 30 years. So that's a potential source or proceeds and then Leviathan we hold 39.66% and so clearly we demonstrated in the past that we would be willing to reduce the interest there while maintaining operatorship. So I think we have a tremendous amount of financing flexibility and we then are able to develop what makes sense economically and what make sense to continue then to support this gas demand in the region. So well thanks everyone. Appreciate the interest in Noble and have a good end to the 2015 year.
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Greece, Egypt, Cyprus to step up talks on delineating offshore exploitation rights | US News
Greece, Egypt, Cyprus to step up talks on delineating offshore exploitation rights
Greek Prime Minister Alexis Tsipras, center, speaks as Egyptian President Abdel-Fattah el-Sissi, left, and Cypriot President Nicos Anastasiades listen to him during their trilateral summit in Athens, Wednesday, Dec. 9, 2015. Greece's political and business leaders promised to expand trade deals with Egypt after meetings following a massive offshore natural gas discovery in the southern Mediterranean.
(AP Photo/Thanassis Stavrakis) |
Associated Press | Dec. 9, 2015
ATHENS, Greece (AP) — Greece, Egypt and Cyprus say they will speed up talks on how to stake out undersea territory in the Mediterranean, following the discovery of a large gas field off Egypt's coast.
At a meeting in Athens on Wednesday, the three countries' leaders issued a joint statement saying they would accelerate talks to resolve "outstanding issues" on delineating their maritime zones.
In August, Italian energy giant Eni announced the discovery of what it described as one of the world's biggest natural gas fields off Egypt. Cyprus and Greece are also hoping to exploit Mediterranean offshore gas and oil reserves.
After talks with Egyptian President Abdel-Fattah el-Sissi and Cypriot President Nicos Anastasiades, Greek Prime Minister Alexis Tsipras voiced hopes that the three countries can cooperate on gas transportation to European markets.
Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
BP enlarges its stake in major gas project in Egypt's Nile Delta | Ahram Online
BP enlarges its stake in major gas project in Egypt's Nile Delta
Ahram Online , Wednesday 9 Dec 2015
Ahram Online , Wednesday 9 Dec 2015
BP Egypt announced on Wednesday expanding its stake in the country’s West Nile Delta (WND) gas project to 82.75 percent after completing the acquisition of additional interest from Hamburg-based DEA Deutsche Erdoel AG, the company said in a release on its official website.
The UK-based company, one of world’s leading oil and gas companies, said it has acquired 22.75 percent in the North Alexandria Concession and 2.75 percent in the West Mediterranean Deep Water Concession of the WND.
The WND project agreement concluded last March, involving the development of 5 trillion cubic feet of gas resources and 55 million barrels of condensates and is expected to produce around 1.2 billion cubic feet per day (equivalent to about 25 percent of Egypt’s current gas production) in 2017, BP said.
DEA said in May on its website that it had farmed down its stake in the $12 billion WND project BP "in order to better balance its portfolio."
Source
The UK-based company, one of world’s leading oil and gas companies, said it has acquired 22.75 percent in the North Alexandria Concession and 2.75 percent in the West Mediterranean Deep Water Concession of the WND.
The WND project agreement concluded last March, involving the development of 5 trillion cubic feet of gas resources and 55 million barrels of condensates and is expected to produce around 1.2 billion cubic feet per day (equivalent to about 25 percent of Egypt’s current gas production) in 2017, BP said.
DEA said in May on its website that it had farmed down its stake in the $12 billion WND project BP "in order to better balance its portfolio."
Source
Analysis: Can the Mediterranean gas triangle become a pentagon? | i24 News
Three-way summit in Athens this week shines spotlight on new Eastern Med alliances and their complexities
As Egyptian President Abdel-Fattah al-Sisi, Greek Prime Minister Alexis Tsipras and Cyprus President Nicos Anastasiades meet in Athens Wednesday, for the third time this year, the Syrian civil war and Islamic State are at the top of their official agenda.
Within a short six-year time span, Cyprus, Israel and Egypt have made five major petroleum discoveries in their territorial waters in the Eastern Mediterranean.
Israel has also grown closer to Cyprus and Greece in recent years as its relations with Turkey have cooled. On his recent visit to Jerusalem, Prime Minister Tsipras said plans were underway for a Greek-Cypriot–Israeli summit to be held next month in Nicosia.
“The Israel-Greece-Cyprus alliance seeks to block Turkey’s ambitions of regional hegemony, while at the same time offering Ankara a key place in the new Mediterranean political order, if and when she comes to her senses,” noted Eran Lerman, senior research associate at Israel’s Bar Ilan’s Begin-Sadat Center for Strategic Studies.
As the Greeks, Cypriots and Egyptians began talks Tuesday, the Israeli PM said he would send a special envoy to Egypt to resolve the dispute between the two firms.
“Major gas discoveries in Israel, Cyprus and Egypt have completely changed regional geopolitics and energy supply,” said Mathios Rigas, chief executive officer of Energean Oil & Gas in Athens.
Ankara has also worked to undermine Sisi in Egypt by hosting exiled Muslim Brotherhood politicians and subsidizing satellite TV channels denouncing the removal of former President Mohamed Morsi.
In April, as Cyprus was conducting exploratory drilling, Turkey dispatched a research vessel into the Cypriot zone — a precursor to drilling.
Tensions continued to grow in May when Nicosia invited the Egyptian and Greek navies to conduct a practice drill in the Mediterranean with Cypriot ships. Joint Egyptian-Greek air force exercises followed. The exercises were clearly aimed at Turkey.
Nonetheless, Turkey and Cyprus have intensified talks over reunification of the island, divided since 1974 between the internationally recognized Greek republic in the south and the breakaway Turkish state in the north.
Ahmed El Bassoussy a researcher at the Regional Center for Strategic Studies in Cairo, says political and economic questions are becoming fused in the region. “It seems that all involved parties began the process of exploiting and utilizing gas politically as a tool to apply pressure,” he said.
A former member of the Greek Communist Party and a leader of anti-globalization protests, Tsipras may seem an unlikely strategic partner for Egypt’s president El-Sisi, a former director of military intelligence and force behind draconian laws against public demonstrations.
But both Tsipras and Sisi share an aversion to Turkish President Recep Tayyip Erdoğan, whom they hold responsible for the rise of jihadism in the region and the exodus of refugees from Syria.
Overtones critical of Ankara were present in a briefing given by Egypt’s State Information Service as Sisi departed for Athens. “The three countries will agree on intensifying their cooperation at the diplomatic and technical levels to convey a common vision to the international community regarding jihadis,” said Information Service spokesman Salah Abdel Sadek.
Jacob Wirtschafter is a Middle East correspondent for Associated Reporters Abroad and a contributor to i24 News from Cairo. His Twitter handle is @levantreporter
CAIRO, Egypt — A new alliance is forming in the Eastern Mediterranean.
By Jacob Wirtschafter, 09 December 2015
As Egyptian President Abdel-Fattah al-Sisi, Greek Prime Minister Alexis Tsipras and Cyprus President Nicos Anastasiades meet in Athens Wednesday, for the third time this year, the Syrian civil war and Islamic State are at the top of their official agenda.
But it’s no secret that the three countries’ political tensions with Turkey, and their desire to develop the huge, newly discovered gas fields off their coasts, will take up much of their time.
Within a short six-year time span, Cyprus, Israel and Egypt have made five major petroleum discoveries in their territorial waters in the Eastern Mediterranean.
Cyprus’ Aphrodite field is estimated to hold 140 billion cubic meters of natural gas. The lion’s share is likely to be exported. Israel’s Tamar and Leviathan fields hold around 900 billion cubic meters of gas in total, positioning it as a future energy exporter, too.
But the largest discovery happened this year at Egypt’s Zohr field, where a find of 850 billion cubic meters - worth around $106 billion - promises not only to stop the periodic electricity blackouts in Cairo but to relaunch the country as a hub for refining and exporting energy to Europe. The finds have led to unprecedented levels of cooperation between Cyprus, Egypt and Greece.
Israel has also grown closer to Cyprus and Greece in recent years as its relations with Turkey have cooled. On his recent visit to Jerusalem, Prime Minister Tsipras said plans were underway for a Greek-Cypriot–Israeli summit to be held next month in Nicosia.
“The Israel-Greece-Cyprus alliance seeks to block Turkey’s ambitions of regional hegemony, while at the same time offering Ankara a key place in the new Mediterranean political order, if and when she comes to her senses,” noted Eran Lerman, senior research associate at Israel’s Bar Ilan’s Begin-Sadat Center for Strategic Studies.
Benjamin Netanyahu was noticeably absent from this week’s summit in Athens – and not because of the contract dispute that erupted in recent days over the failure of the Egyptian General Petroleum Corporation to deliver gas to the Israel Electric Company through a pipeline which runs across the Sinai.
As the Greeks, Cypriots and Egyptians began talks Tuesday, the Israeli PM said he would send a special envoy to Egypt to resolve the dispute between the two firms.
But prospects of a four-way summit – with Greece, Cyprus, Egypt and Israel – are slim to none. Sisi will continue the cordial phone calls with the Israeli Prime Minister but there will be no formal, publicly visible encounter as long as Jerusalem is dug in over settlement expansion in the West Bank and reluctant to accept a Palestinian state.
Greece and Cyprus, on the other hand, are also in lock-step with EU policies on Israeli-Palestinian matters - but that’s not stopping them from solidifying economic and military ties with the Jewish state.
“Major gas discoveries in Israel, Cyprus and Egypt have completely changed regional geopolitics and energy supply,” said Mathios Rigas, chief executive officer of Energean Oil & Gas in Athens.
But Turkey has moved aggressively to stymie the countries’ efforts, reviving its traditional antagonism to Greece and the ethnic Greek government of the divided island of Cyprus.
Ankara has also worked to undermine Sisi in Egypt by hosting exiled Muslim Brotherhood politicians and subsidizing satellite TV channels denouncing the removal of former President Mohamed Morsi.
In April, as Cyprus was conducting exploratory drilling, Turkey dispatched a research vessel into the Cypriot zone — a precursor to drilling.
Tensions continued to grow in May when Nicosia invited the Egyptian and Greek navies to conduct a practice drill in the Mediterranean with Cypriot ships. Joint Egyptian-Greek air force exercises followed. The exercises were clearly aimed at Turkey.
Nonetheless, Turkey and Cyprus have intensified talks over reunification of the island, divided since 1974 between the internationally recognized Greek republic in the south and the breakaway Turkish state in the north.
Ahmed El Bassoussy a researcher at the Regional Center for Strategic Studies in Cairo, says political and economic questions are becoming fused in the region. “It seems that all involved parties began the process of exploiting and utilizing gas politically as a tool to apply pressure,” he said.
A former member of the Greek Communist Party and a leader of anti-globalization protests, Tsipras may seem an unlikely strategic partner for Egypt’s president El-Sisi, a former director of military intelligence and force behind draconian laws against public demonstrations.
But both Tsipras and Sisi share an aversion to Turkish President Recep Tayyip Erdoğan, whom they hold responsible for the rise of jihadism in the region and the exodus of refugees from Syria.
Overtones critical of Ankara were present in a briefing given by Egypt’s State Information Service as Sisi departed for Athens. “The three countries will agree on intensifying their cooperation at the diplomatic and technical levels to convey a common vision to the international community regarding jihadis,” said Information Service spokesman Salah Abdel Sadek.
Jacob Wirtschafter is a Middle East correspondent for Associated Reporters Abroad and a contributor to i24 News from Cairo. His Twitter handle is @levantreporter
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