By George Telaveris
The government has received the draft gas field development plan for the Aphrodite field in Block 12 from Noble Energy and its partners, but it is now an open secret that unless Cyprus clinches a deal with a potential buyer, the plan will remain on paper.
Negotiations to sell part of the estimated 4.54 trillion cubic feet (tcf) in Block 12 to Egypt were seriously undermined following the discovery of the Zohr supergiant gas field by Eni in Egyptian waters last August.
“Selling gas for domestic consumption in Egypt is not really a possibility for Cyprus, as Egypt will be able to cover its needs by 2020,” hydrocarbons business consultant Charles Ellinas told the Cyprus Weekly.
The gas find in Zohr is estimated at 30 tcf or 850 billion cubic metres. All of it will be allocated to cover the Egyptian domestic market.
When BG Group joined as a partner of Block 12 earlier this year, the government had hoped that Cyprus could sell gas to Egypt for liquefaction and onto Europe as liquefied natural gas (LNG). BG (now bought by Shell) is a major partner in the Idku LNG plant in Egypt. However, this is now in question. “With current gas prices this is commercially challenged,” Ellinas said.
Turkey or FLNG
Ever since Cyprus dropped its plans for an LNG terminal at Vasilikos because recoverable quantities were not enough to make it viable, the Noble consortium has been left with only two options: either the new technology of a floating LNG (FLNG) plant or a pipeline to Turkey’s energy-hungry market, which in turn depends on a solution of the Cyprus problem.
The Aphrodite partners are already in talks with officials and companies in Turkey, since they are also interested in se-lling gas to Turkey from their offshore gas fields Israel.
Selling the Israeli natural gas to Turkey also depends on rapprochement – between Turkey and Israel. Earlier this week Israel’s energy minister Yuval Steinitz said that most of the issues between Turkey and Israel had now been cleared up.
FLNG does not have such political complications and has more marketing options.
However, Ellinas notes that it requires an investment of $6-8 billion in a period when oil and gas companies all over the world are cutting down their expenses in order to adjust to low prices.
A third but distant option of LNG depends on Eni and Total making significant discoveries during their next drilling phases.
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