Gloomy outlook: Aphrodite moves to exploitation - CYPRUS MAIL

Noble’s senior VP K. Elliot (L), Energy Minister G. Lakkotrypis

November 17, 2019
Charles Ellinas

The granting by the government last week of the Aphrodite gas-field Exploitation Licence for 25 years to the Noble Energy, Delek and Shell consortium is a milestone in the development of hydrocarbons discovered in the Cyprus EEZ. Not only it is the first such licence, but it enables the consortium to enter negotiations with Egypt’s Idku LNG plant to secure a gas sales contract for this gas.

Understandably, this generated considerable euphoria even to the extent of talking about the immense profits to Cyprus, estimated to be $9.3billion over the life of such a contract – based on an oil price of $70/barrel.

But let’s try to put this in context. First, the application by the consortium for an Exploitation Licence is a contractual requirement – otherwise it might have to relinquish the gas field. It does not mean that it will immediately proceed with development and production. This requires the successful completion of a number of important steps: Design of all required facilities to get a better handle over costs; Drilling at least one more appraisal well to estimate more accurately Aphrodite’s gas reserves; negotiations with Idku to secure a gas sales contract; Securing the required investment.

Aphrodite feels the love - PETROLEUM ECONOMIST

Nicosia, 12 November 2019

Gerald Butt

Cypriot energy minister Georgios Lakkotrypis issues the country’s first exploitation licence to the Aphrodite consortium to export gas to Egypt

The discussion of exactly where the gas discovered back in 2011 in Cyprus' offshore Block 12, by a consortium including US independent operator Noble Energy, would end up has loomed for almost all the 2010s.

At his Nicosia office, the country's energy minister tells Petroleum Economist Middle East editor Gerald Butt that the question has now finally been resolved.

What is now the way ahead for Aphrodite?

Lakkotrypis: The plan is that we will transport the gas vis a subsea pipeline to Egypt, liquefying it at Idku, from where it will be shipped by Shell [another partner, along with Israel's Delek, in Aphrodite] to international markets, primarily Europe. We have spent the past 12 months or more discussing the details of a revised production sharing contract (PSC) and field development plan. So now we have the exploitation licence. First gas will be in 2025.

Why has it taken so long to get gas out of Aphrodite?

Challenges to Israel’s gas exports - CYPRUS MAIL

September 15, 2019
Charles Ellinas

Since discovery of natural gas in its exclusive economic zone Israel has been dreaming of exports, riches and political influence. Massive political capital has been expended in this direction, but so far without results, apart from small exports to Jordan, and possibly Egypt, but not to global markets.

The giant gas-field Leviathan is expected to come on-stream by end-2019, with as much as 9-10 billion cubic metres/yr (bcm/yr) surplus gas available for export. Noble Energy and its partners have been considering all options to secure international buyers for this, but unsuccessfully.

The main challenge is commercial. Gas prices are low globally and even though they may rise after 2025, they are still expected to be at levels that challenge exports of gas from the East Med. For example, gas prices in Europe are currently just over $3/mmbtu (per about 1000 cubic feet) and are forecast to average $6-$6.50/mmbtu between 2020-2030. Political will is not sufficient to overcome price limitations, despite all the hype, either in Israel or in Cyprus.

East Med gas is mostly in deep water and deep reservoirs. This makes it expensive to develop. The lack of regional infrastructure also impacts the cost of exporting such gas.

Offshore Deposits Offer New Horizons for Cyprus - SOUTH EU SUMMIT

May 9 2019

B. Lana Guggenheim

Thanks to new discoveries of offshore natural gas, Cyprus has a real opportunity to expand its reach in the energy market. But to do this, the island-nation needs to navigate tricky geopolitical realities - as well as expand its current infrastructure – or the opportunity may slip away.

Earlier this year, international energy players discovered two more sites rich in natural gas, just offshore of Cyprus, in Blocks 6 and 10, respectively led by Eni and Total on the one hand, and ExxonMobil and Qatar Petroleum, on the other. This follows previous discoveries in the area, starting as early as 2009, when prospectors discovered reserves of natural gas in the Tamar field off the coast of Israel. Subsequently came the discovery of the Leviathan field offshore of Israel, and the Aphrodite and Calypso fields in Cypriot waters. Altogether, these deposits contain an estimated 40 trillion cubic feet of natural gas – or more.

Currently, both Cyprus and Israel import their energy, but these gas fields have the potential to change all of that, as well as generate revenue via energy exports. Both Europe and Egypt are target markets for this new energy resource, especially as Europe’s demand for natural gas is likely to increase – in part to reduce its reliance on Russia, but also because gas is a cleaner alternative to coal, as the continent slowly transitions to renewable energy sources.

Cyprus ponders gas monetisation options - PETROLEUM ECONOMIST

Nicosia, 29 April 2019

Gerald Butt

New natural gas discoveries offshore Cyprus have revived the possibility of the island hosting an LNG plant

Cyprus is finally in a position where it can realistically start exploring a number of ways of getting natural gas to market. Seven years after the first discovery in Cyprus' offshore economic exclusion zone (EEZ) — the Aphrodite field in Block 12 (4.5tn ft3 of gas in place) — the island has notched up two more finds.

Last year, an Eni-Total consortium struck gas at Calypso in Block 6 (estimated 3-5tn ft3). The most recent newcomer is Glaucus-1 (5-8tn ft3) in Block 10, discovered by ExxonMobil, partnered by Qatar Petroleum.

Energy minister Yiorgos Lakkotrypis, addressing Gulf Energy's Eastern Mediterranean Gas Conference in Nicosia in early March, said the "quality of the reservoir in Block 10 allows us to be optimistic about the very high recoverability potential" of the ExxonMobil discovery. Last year, the first well drilled on Block 10 failed to find commercial reserves. With the Glaucos success, "we are waiting for the remodelling or re-calibrating of geological data and will look again at Block 10 targets".

East Med Gas Forum ‘evolving into international organisation’ - CYPRUS MAIL

APRIL 18 2019 

ELIAS HAZOU

The East Med Gas Forum (EMGF) will be meeting again in June with the purpose of evolving into an international organisation, energy minister Giorgos Lakkotrypis said Thursday.

Speaking at the 9th Nicosia Economic Congress, Lakkotryrpis said that he hoped the forum – consisting of Egypt, Cyprus, Greece, Italy, Israel, Jordan, and the Palestinian Territories – will take the form of an international organisation.

The forum is necessary in order for eastern Mediterranean gas to be competitive, while member states are discussing issues such as the preferred infrastructure for the optimal exploitation of hydrocarbons wealth.

The region faces many “challenges,” Lakkotrypis said, which is one of the reasons why the United States and the EU support are supporting the EMGF as observers.

Tough choices: how to monetise Cyprus’ gas - CYPRUS MAIL

ENI's Carlo Vito Russo and Alessandro Barberis with Energy Minister
Giorgos Lakkotrypis at the seminar

MARCH 10, 2019

Charles Ellinas

Should Cyprus pipe gas to Egypt or build a LNG plant at Vasiliko?

The future of Cyprus’ and the East Med’s gas discoveries was one of the key aims of the annual East Med Gas Conference (EMGC) held in Nicosia this week.

Organised by the US Gulf Energy Information, the conference was well attended, with a rich programme covering the state of the East Med, challenges in exploration and production of the region’s resources, energy security and Cyprus as an oil and gas service centre.

The conference was opened by Energy Minister Giorgos Lakkotrypis, who gave an overview of the results from block 10 and future plans. He said that Glafcos, the results of which were announced last week, is a high quality reservoir, with in-place gas estimated to be 5-8 trillion cubic feet (tcf), with recoverability expected to be high.

ExxonMobil’s drilling in context - CYPRUS MAIL

FEBRUARY 10, 2019

As ExxonMobil approaches the end its drilling campaign, rumours about the results abounded this week as have the extravagance of some of the claims. So let’s put what we know in context. What I present below is based on information, seismic data, satellite data, even hearsay, but we all need to be mindful that so far ExxonMobil has not made any announcements.

Results so far

It appears that Delphine has not struck commercial quantities of gas, but it is likely to have encountered gas presence. Even though disappointing, given expectations, this does not mean that there is no gas in the reservoir. This can only be ascertained by evaluating the results from Delphine and potentially carrying out further drilling in the vicinity of this target. Seismic and satellite data show a strong potential for a substantial gas reservoir at this location. We need to wait and see what ExxonMobil announces.

Exxon reportedly discovers oil in Cyprus Block 10 - KATHIMERINI / KNEWS

07 FEBRUARY 2019 - 10:15

Apostolis Tomaras

A sufficiently large and commercially viable oil reservoir has been reportedly discovered in Cyprus's Block 10 Glaucus target, according to Kathimerini sources.

Official results from Exxonmobil are not expected until the end of next week. The information comes from sources with knowledge of the matter.

The news of the discovery comes following uncertain indications regarding natural gas deposits in an earlier exploratory drilling at Delphini target, also in Block 10.

A sufficiently large and commercially viable oil reservoir has been discovered in Cyprus's Block 10

According to 'technocratic sources', Kathimerini has learned that the geological formations of the Glaucus target are limestone sedimentary rocks. To confirm that oil has been found, it would mean, according to the same sources, that the Exxonmobil drill has reached about 6 km deep.

Geopolitical Stakes Are Huge On This Tiny Island - OILPRICE.COM

Dec 08, 2018, 11:59 PM CST

Damir Kaletovic

The specter of a rumored U.S. military buildup in Cyprus that would draw a major Russian response now adds to the ongoing Greek Cypriot-Turkish conflict over the island and the oil and gas riches it promises.

Ever since the massive hydrocarbon discovery in Cyprus’ exclusive economic zone (EEZ) in 2011 by American company Noble Energy the island has been the center of a geopolitical game that doesn’t stop with rife tensions between Turkey and the Greek Cypriots.

And now this game is drawing nearer to its climax, with much at stake.

Cyprus--an island in the eastern part of the Mediterranean Sea—is divided into the Greek-dominated Republic of Cyprus in the south and the Turkish-controlled north. Since 2004, the Republic of Cyprus has been a member of the European Union, and the northern ‘entity’ remains recognized solely by Turkey.

But it is the EEZ—the exclusive economic zone—where this geopolitical game of chess is being played out.

Israeli sources: EU funding, better 'understanding' between Cyprus, Turkey necessary for East Med pipeline to materialize - NAFTEMPORIKI

Wednesday, 01 November 2017 14:42, UPD: 02/11/2017 10:10
V. Kostoulas

The prospect of securing EU funding and a "better understanding" between Cyprus and Turkey are judged as significant factors for achieving the construction of the East Med natural gas pipeline, which would link deposits exploited in the east Mediterranean with west European markets.

Israeli analysts well versed with the Netanyahu government's energy policy directly referred to these two factors in comments to "N" last month, while adding that the proven energy reserves comprise a valuable took in exercising policy in the wider region.

Cyprus EEZ is heating up - IN CYPRUS / CYPRUS WEEKLY

May 21, 2017
Charles Ellinas

As we get closer to the July start of drilling by Total in block 11 Cyprus EEZ is hotting-up, from the usual headlines and often exaggeration in the local press, to political positioning, possibly driven by the forthcoming presidential elections, and Turkey’s predictable and expected bullying. But, thankfully, it is the oil and gas companies that have their feet on the ground, proceeding with the serious business of exploration and drilling as planned. This is the subject of my article today.

Turkey’s position

In order to understand Turkey’s disruptive and often provocative actions in Cyprus EEZ, it is important to understand its position.

An LNG plant is still the best option for Cyprus - IN CYPRUS / CYPRUS WEEKLY

May 14, 2017
Panayiotis Tilliros

The Eastern Mediterranean (East Med) energy resources constitute a credible alternative source that can help Europe diversify and reinforce its energy supply and transit security, given that indigenous gas production in Europe is on a declining trend and demand is on a rising trend.

Besides its traditional gas supply routes from Russia, Norway (indigenous production) and North Africa, Europe is seeking new gas supplies via the Southern Gas Corridor, comprising the ‘Fourth Corridor’ in the Caspian sea (Azerbaijan and probably Turkmenistan) and the ‘Fifth Corridor’ in the East Med. According to an official EU website, the EU aims to import initially 10 billion cubic metres (bcm) of gas per year when the new corridor opens in 2019-20. This is predicted to rise to 80 to 100 bcm per annum in the future.

Provocations will not alter energy plans - CYPRUS MAIL

May 9, 2017
Elias Hazou

Cyprus is determined to press forward with its energy plans irrespective of any Turkish provocations, energy minister Giorgos Lakkotrypis reiterated on Tuesday.

He was speaking to reporters following a closed-doors briefing to MPs on the state of play regarding the government’s offshore hydrocarbons programme.

Asked about the dispatch of the Turkish seismic survey vessel Barbaros Hayreddin Pasa, as well as Turkey’s naval military drills off Cyprus, Lakkotrypis said these moves would not perturb Nicosia.

“The answer is clear… the procedures regarding our energy programme are not affected,” he said.

“Turkey is provoking us and will continue to do so, but we shall continue doing the self-evident, which is to exercise our sovereign rights, no more, no less.”

The real prospects of East Med Gas - IN CYPRUS / CYPRUS WEEKLY

March 19, 2017
Charles Ellinas

This was the subject of a very successful conference – EMGC 2017 – held in Nicosia over March 14-15 and attended by leading experts and delegates from 25 countries.

The conference was organised by Gulf-Publishing Company Houston. Its focus was the East Med gas industry and its development, concentrating on markets, project development, gas monetisation, investment and gas trading, avoiding local politics. In other words the conference covered all the key issues that affect the future development of East Med gas resources. I examine and analyse these in this article.

EMGC '17: Eni chief shares invigorating projections for Eastern Med gas - WORLD OIL / HYDROCARBON PROCESSING

Luca Bertelli, CEO of Italy's Eni SpA (photo by Adrienne Blume)

March/14/2017
Adrienne Blume

NICOSIA -- Gulf Publishing Company's Eastern Mediterranean Gas Conference (EMGC) 2017, the fourth incarnation of the world's primary event for discussing the forces shaping gas industry development in the Eastern Mediterranean, opened on March 14.

Luca Bertelli, Chief Exploration Officer of Italy's Eni SpA, opened EMGC 2017 with a keynote address on key gas exploration and development activities in the region, particularly Eni's massive Zohr field in Egypt.

A decade of discovery. "We call the Eastern Mediterranean the 'sea of gas'," Mr. Bertelli said. Eni has been discovering gas in the region for 50 years, starting in the Nile Delta and Egypt's shallow waters. The Italian company partnered with Britain’s BP for exploration activities in the early 1980s.

Energy giant ENI believes there could be another Zohr field in the region - CYPRUS MAIL

March 14, 2017

A second super-giant gas field like Zohr could be awaiting discovery in the eastern Mediterranean, perhaps off the coast of Cyprus, Italian energy giant ENI said on Tuesday.

“We believe there could be another Zohr in the region. We hope so,” said Luca Bertelli, ENI’s Chief Exploration Officer, speaking at the fourth Eastern Mediterranean Gas Conference in Nicosia.

ENI discovered the Zohr prospect, in Egypt’s exclusive economic zone (EEZ) in 2015. The field holds an estimated 30 trillion cubic feet of gas in place, and is the largest ever natural gas find in the Mediterranean surpassing Israel’s Leviathan.

ENI had taken a gamble, using a geological sequencing model tracking carbonate reservoirs rather than the classical sand-reservoir model.

LNG plant at Vassilikos still an option, president says - CYPRUS MAIL

President Anastasiades,Mediterranean Oil and Gas Forum 2017

March 1, 2017
Angelos Anastasiou

Monetising the Aphrodite gas field is a top priority for the government, which based on expected future gas finds is also looking at options, including a liquefaction terminal at Vassilikos, President Nicos Anastasiades said on Wednesday.

In his speech at the 8th Mediterranean Oil and Gas Forum in Nicosia, Anastasiades presented the government’s strategy for the development of the hydrocarbons sector, which includes improved cooperation among the region’s countries.

Final decision on third-round concessions expected early 2017 - CYPRUS MAIL

Minister Yiorgos Lakkotrypis, in charge of energy, at the House

November 14, 2016
Elias Hazou

Technocrats’ initial assessments of the bids submitted by energy companies in the third offshore licensing round should be ready within the next few weeks, Energy Minister Giorgos Lakkotrypis told MPs on Monday.

Once the ministry receives the reports and presents them to the cabinet, there will follow a period of negotiations with the preferred bidders.

A final decision awarding concessions should be made by early 2017, Lakkotrypis said.

In May 2016 Cyprus launched its third offshore licensing round. Three blocks (6, 8 and 10) have been put up for auction.

Israel Should Avoid Turkey, Include Cyprus in Gas Export Projects - IMRA / BESA CENTER

Saturday, October 8, 2016, By Ariel Ben Solomon

Published originally as 'Israel Should Avoid Turkey, Include Cyprus in Gas Export Projects' on October 7, 2016 in BESA Center Perspectives Paper No. 370 

EXECUTIVE SUMMARY: Israel should rule out building a natural gas pipeline to Islamist Turkey because of the political risk involved. It should instead consider using LNG technology for export through Cyprus. Although this would be expensive, it would be a less risky and more durable option over the long term. This should be in addition to exporting to Jordan and possibly to Egypt.

As Israel begins closing deals for its natural gas, it should avoid linking itself to any expensive long-term pipeline deal with Turkey at the expense of allies Cyprus, Greece, or even Egypt. 

Notwithstanding the recent easing of tensions between the two countries, Israel cannot trust Turkish President Recep Tayyip Erdogan’s Islamist regime as a linchpin in its natural gas export strategy.