Lebanon’s emerging oil & gas sector: a discussion with Energy Minister Arthur Nazarian | MESP

Lebanon’s emerging oil & gas sector: a discussion with Energy Minister Arthur Nazarian

AUGUST 31, 2014 in LEBANON, LEBANON - OIL & GAS UPDATES, OIL & GAS

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Energy Minister Arthur Nazarian issued a decision on August 8, 2014, postponning the deadline to submit bids in Lebanon’s first licensing round from August 14, 2014, to a maximum period of six months from the date of the adoption of the two missing decrees related to block delineation, and the tender protocol and model exploration and production agreement (EPA) by the government. Frequent power vacuums within the executive branch (the country was run by a caretaker cabinet with limited powers for almost a year, from March 2013 until February 2014, and has been without a President since May 25, 2014) made it difficult to approve the two decrees. Yet, Lebanon’s seemingly high country risk at this point in time does not eclipse its substantial energy potential.

In a long discussion with Middle East Strategic Perspectives, Energy Minister Arthur Nazarian provides an update of the prevailing situation and presents the latest developments related to the sector, including progress made in the FSRU and LNG import tenders. Nazarian outlines the advantages Lebanon offers to foreign investors and presents his interpretation of Lebanon’s position in the Eastern Mediterranean. As Energy Minister, and industrialist, he lists the major effects the exploitation of offshore resources could have on the economy and calls on the local business community to engage in the development of the petroleum sector by building its capabilities and seizing the opportunities presented by the EPA, which requires right holders to give preference to local goods and services, even if the offer is slightly more expensive. Throughout the interview, Nazarian expresses an optimistic, yet measured tone, that is appreciated in the current circumstances.

Lebanon just announced yet another postponement of its first licensing round. Do you think this and the prevailing political instability could affect foreign companies’ interest in getting involved in the exploitation of offshore resources?

International Oil and Gas companies expressed their interest in investing in the Lebanese offshore through the pre-qualification process conducted in 2013. The decision for IOCs to invest in a country is based on several factors that they assess thoroughly both at the level of the host country as well as the IOC. At the country level, these factors include but are not limited to: the hydrocarbons’ prospectivity, geological assessments, technical capacity and challenges, petroleum regulations, fiscal systems, national laws and regulations related to foreign investments, governance of the petroleum sector and its management, financial and judicial reliability and stability, political context, and national and regional security.

Lebanon scored well on all of the factors listed above – set aside security – except for the ability to abide by the timeframe for the completion of the first licensing round approved by the Council of Ministers.  This affects the overall planning and investment programming of the IOCs. Noting that exploration opportunities are available at the global and regional levels with high competition among countries as well as between IOCs.

IOCs that have high interest in investing in the Eastern Mediterranean and have long term plans to tap on the gas prospectives, will still be interested to invest in Lebanon. However, the timing and the competing investment opportunities, along with the prevailing political context will determine the final decision of IOCs.

IOCs conducted their own risk assessment with regards to Lebanon’s political context and security status, based on which they have submitted their pre-qualification application, bought and interpreted seismic surveys, and are preparing their bids. This shows the interest of IOCs to operate in Lebanon, noting that they very often operate in countries with high political and security uncertainties.

However, given this context, IOCs will factor-in these risks in their bids to compensate for any potential losses. Accordingly, the Government needs to work on de-risking the factors affecting the investment decisions for IOCs, to ensure that we receive the optimal bids for the first licensing round.

The Ministry and the LPA have taken all these factors into consideration, thus creating a petroleum regulatory system along with a licensing strategy that would ensure obtaining the best offers at this period of time.

Lebanon is lagging behind some of its neighbors. What advantages could it offer to investors to differentiate itself and promote itself as a privileged destination for foreign investments?

It is true that Lebanon is lagging behind its neighbors with regards to exploration and production activities, however Lebanon may compensate for this through two main issues. The first is the extensive and high quality 2D and 3D seismic surveys covering 100 and 70% of the Lebanese offshore respectively. This would save at least two years of the exploration phase. Second, the relatively easy access for exporting Lebanese gas to the region through the Arab Gas Pipeline, to Europe through onshore or offshore pipelines, and to the international market through LNG plants that can be built in Lebanon, jointly with other countries in the region, or by using existing plants in Egypt for example. This provides a good added value for Lebanon compared to countries in the region.

Offshore exploration, as well as developing the needed infrastructure for gas processing and transportation are capital intensive. Lebanon has a strong banking sector and private sector companies that have enough capital and are willing to invest in the petroleum sector. This will encourage IOCs to invest in a country where local capital exists unlike the neighboring countries.

In addition, Lebanon can offer qualified workforce and human resources that are well positioned to acquire quickly the specific skills needed to actively engage in developing the petroleum sector. This will also be an attractive factor for IOCs, particularly in cases of critical security status were IOCs will face difficulties in mobilizing foreign workforce.

The time factor is very important in the race to exploit resources. Other countries in the region are already either exploring for or exploiting their resources (Israel, Cyprus, but also Greece, Croatia, Montenegro etc). Could this have consequences for a country that aspires to become a gas producer and perhaps even exporter?

Time is a crucial factor for obtaining the optimal conditions for gas exploration and production. As a new gas exporter, the Levant basin is attracting a lot of global interest from IOCs as well as from countries, particularly the European Union whose new energy security strategy focuses on diversification of gas imports. The recent energy conference and Ministerial meeting organized by the EC and hosted by Malta and Cyprus, confirmed the importance of the Eastern Mediterranean region, including Lebanon, as a strategic partner to the European Union that may help achieve the diversification objective set out in the energy strategy. In addition, gas demand in countries in the region will continuously increase due to the high population growth, growing consumption patterns, and environmental policies. Moreover, discussions have been initiated with regards to creating a regional gas pricing hub.

As mentioned earlier, Lebanon’s strategic position and prospective hydrocarbons production potential, may allow it to play a role in supplying a portion of the regional demand, but more importantly contribute to the diversification of gas supplies. Depending on the volume of gas that may be produced, Lebanon may be able to access the global market through LNG. This will open new venues and market options.

Could you update us on the FSRU and LNG import tenders?

Ministry of Energy and Water have completed, with the help of the international consultant Poten & Partners, the evaluation of technical and financial offers of the FSRU tender where we had fierce competition between three international companies that led to very good prices w.r.t FSRU’s market price. The final report has concluded a preferred bidder and was sent on May 19th 2014 to the Lebanese Cabinet for their review and approval.

In addition to that, the ministry has been approached by a good number of LNG suppliers who showed interest in the EOI that was launched in December 2013, and now we are in the process of initiating the negotiation with them.

Both the FSRU and the LNG supply will commence as soon as the cabinet give the green light on the whole process.

As a minister, and also an industrialist, what are the major effects you would expect the exploitation of offshore resources to have on the economy?

The exploration and exploitation of the offshore hydrocarbon resources will have major beneficial effects on the national economy, directly through jobs creation and direct investments that will be committed by the IOCs or indirectly through the accessorial businesses and economy that will be developed and it’s repercussions on the governmental budgets and taxation policies…

Namely:

- The creation of thousands of jobs directly in the sector: i.e. the operator oil companies that will be awarded the licenses.

- The creation of an even greater number of jobs in the service companies, especially that the ministry and the PA have made a special emphasis in the EPA on the local component where as a minimum of 80% of the hired human resources, should be Lebanese and a 5 and 10% advantage have been provided for the Lebanese suppliers and service sub-contractors.

- Lebanese industrialists will however benefit from a cheap energy bill which has been so far one of the majors impediments to competitiveness on the international markets for Lebanese products.

- The revenues of the petroleum activities that would be injected directly in the budget will inevitably decrease the high custom rates on raw materials that have also been a great impediment to Lebanese products competitiveness…

How do you think the business community and the private sector should prepare for the possible development of an oil and gas sector?

The Lebanese business community is very dynamic and active. Some already started exploring opportunities to work in the oil and gas sector in Lebanon. Our aim is to maximize the benefits of this sector for the national economy and the people of Lebanon. The investments to be undertaken during the exploration and development phases are vital for engaging the Lebanese workforce and service companies. For that, the Ministry and the LPA have put in place very strong regulations for local content, where IOCs are required to employ up to 80% of Lebanese nationals in their workforce. This target is to be met gradually. In addition, goods manufactured in Lebanon will have a 5% cost incentive, and 10% for services provided by Lebanese companies.

The Lebanese private sector is encouraged to engage in the development of the petroleum sector through first understanding the value chain including all the services and goods that will be required by IOCs during the exploration, development and production phases. This needs to be followed by building their own capabilities to be able to provide the required services and goods within the required quality standards and competitive prices.

The engagement of the local business sector is vital in order to ensure that foreign investment is benefiting the local economy.

Link to source: http://www.mestrategicperspectives.com/2014/08/31/lebanons-emerging-oil-gas-sector-discussion-energy-minister-arthur-nazarian/

Who Can Meet Egypt's Energy Needs? | Forbes

8/29/2014 @ 8:59AM 1,547 views

Who Can Meet Egypt's Energy Needs?

Christopher CoatsContributor

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As a tumultuous summer grinds to a close, Egypt is still struggling to close the gap meets its daunting energy needs without further strain to its economy or the patience of the general public. Under new leadership, Cairo has looked at home and abroad for some energy relief, but found that political realities often make certain options impossible.

In addition to the unnerving task of meeting the needs of the region’s most populous country, Cairo has struggled to keep energy prices manageable while coping with a sharp decline in foreign investment and domestic production, all while drawing down an unsustainable public subsidy program.

This summer, the notion of addressing energy shortages through a reversal of gas trade agreements with Israel become a possibility with reports of a new agreement. In June, production partners in Israel’s Leviathan offshore gas field has signed a non-bindingagreement with the BG Group to export gas from a “floating production, storage and offloading [vessel]” and connected to an LNG facility through a subsea pipeline.

For BG, a link to the field’s estimated 18 trillion cubic feet of gas would help ease pressure from the significant drop in gas output from Egyptian projects that has occurred over the last three years. The letter of intent comes shortly after a similar deal was struck to export 2.5 trillion cubic feet of gas over 15 years from Israel’s Tamar field through the Damietta LNG plant in Egypt, which is operated by Union Fenosa Gas. According to the project planning, much of the gas would likely move on to other markets, though Cairo appeared insistent that some would have to be set aside to address domestic demand.

However, last week it appeared that the new government would nix any possible imports from Israel. According to Egyptian state media, President Abdel Fattah al-Sisi said that Egypt would not pursue any import or export agreements with Israel.

In the three years, the possibility of buying Israeli gas has become a political land mine as critics were quick to cite investigations that allege years of selling Egyptian gas to Israel for far less than market prices. Revealed in the weeks after the collapse of the Mubarak government, the allegations included payments to Mubarak officials in exchange for low cost gas, including a now-cancelled 20-year agreement.

Coupled with ongoing tension between the governments of the two countries, the recent memory of these agreements and lost revenue that resulted from them, the possibility of a revived trade agreement has been a difficult policy to sell. Earlier this year, Sherif El Diwany, Executive Director of the Egyptian Center for Economic Studies in Cairo suggested that Isreali imports would be especially difficult be that purchasing gas would likely cost far more than what Egypt had ever charged them.

“In a volatile political situation, its not wise to become dependent on Israel – el-Sisi  will not do it,” he said, suggesting import alternatives from Gulf producers instead.

On the domestic front, Egypt has launched a series of local efforts to recover the decline in production that followed the disruption of the Arab Spring. A few days before the new year, the Egyptian government announced plans to auction 22 oil and gas concessions through this month.  Promoted by Egypt’s General Petroleum Corporation and Natural Gas Holding Company, the concessions are spread across the country, including opportunities in the “Suez Canal, Egypt’s western desert, the Mediterranean sea and the Nile Delta”. However, necessary cooperation from foriegn firms has been made difficult by the country’s struggle to draw down its substantial energy sector debt to international importers.

This week, Cario did receive some positive news with reports that production had begun at the Denise-Karawan offshore gas project, which is operated by Italy’s Eni. According to an Oil and Gas Journal report, the project will include five subsea wells, production systems and marine pipelines towards a peak production of 6.5 million cubic meters a day, which it is expected to reach in early 2015.

Link to source: http://www.forbes.com/sites/christophercoats/2014/08/29/who-can-meet-egypts-energy-needs/

Σημαντική εξέλιξη: «Ναι» Αιγύπτου στη συνεκμετάλλευση κοιτασμάτων | ΦΙΛΕΛΕΥΘΕΡΟΣ

Παρασκευή, 29 Αυγούστου 2014 11:18 πμ

Ισχυρό μήνυμα προς Τουρκία

Σημαντική εξέλιξη: «Ναι» Αιγύπτου στη συνεκμετάλλευση κοιτασμάτων

Λευκωσία: Η Αίγυπτος επικύρωσε χθες την Συμφωνία που υπέγραψε τον περασμένο Δεκέμβριο στο Κάιρο ο Πρόεδρος Αναστασιάδης με τον Πρόεδρο της Αιγύπτου Αμπντέλ Φατάχ αλ Σίσι.

Το γεγονός έχει πολλαπλή σημασία αφού επιβεβαιώνει τις στενές σχέσεις Κύπρου – Αιγύπτου και στα κρίσιμα θέματα εκμετάλλευσης των υδρογονανθράκων.

Πρόκειται για συμφωνία που καθορίζει τις διαδικασίες που θα ακολουθούνται για να καθοριστούν τα δικαιώματα κάθε χώρας, σε περίπτωση που ανακαλυφθούν κοιτάσματα στα όρια των ΑΟΖ Κύπρου και Αιγύπτου που εκτείνονται και στις δύο ΑΟΖ, κάτι που είναι πολύ πιθανό να προκύψει τα αμέσως επόμενα χρόνια.

Να σημειωθεί ότι τα τεμάχια 4, 5, 10, 11 και 12 έχουν τα νότια τους όρια στη διαχωριστική γραμμή των ΑΟΖ Κύπρου και Αιγύπτου.

Ταυτόχρονα, ξεκαθαρίζει σημαντικά θέματα για τις εταιρείες που έχουν τα δικαιώματα στα τεμάχια αυτά και κυρίως στα τεμάχια 10 και 11 τα δικαιώματα έρευνας και ανάπτυξης των οποίων έχει η Γαλλική TOTAL.

Επίσης, εμμέσως επαναβεβαιώνει την πλήρη αναγνώριση της Αιγύπτου ως προς την Κυπριακή ΑΟΖ, αφού το τεμάχιο 4,  είναι ένα από αυτά που προσπαθεί να αμφισβητήσει η Τουρκία.

Οι διαπραγματεύσεις για την επίτευξη της συμφωνίας αυτής ξεκίνησαν το 2011 ωστόσο καθυστέρησαν λόγω των γεγονότων στην Αίγυπτο.

Η επίσκεψη του Αιγύπτιου υπουργού Ενέργειας στην Κύπρο τον περασμένο Φεβρουάριο αλλά και του Κύπριου Υπουργού Ενέργειας στην Αίγυπτο προ δύο εβδομάδων, επέδρασαν καταλυτικά στην προώθηση και επίσπευση της επικύρωσης της διακρατικής συμφωνίας από την Αίγυπτο.

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Cypriot president: Underwater gas fields can help unite island | CNN

By John Defterios and Eoghan Macguire, CNN, August 25, 2014 -- Updated 1348 GMT (2148 HKT)

STORY HIGHLIGHTS

• Cyprus is sitting on large underwater reserves of natural gas
• Country is expected to exploit fields in coming years and generate billions of dollars in process
• Cypriot president believes energy discovery could help unite the island

Editor's note: Watch the full interview with Nicos Anastasiades on Marketplace Middle East Facetime on CNN .Click here for the show times

(CNN) -- It may be early days in the quest for energy underneath the crystal blue waters of the Mediterranean -- but the eventual bounty may be sizable for Cyprus.

The Eastern Mediterranean is considered a new energy frontier with a 2010 report from the U.S. Geological Survey estimating there to be 122 trillion cubic feet of gas in the area.

Nearby Israel, Lebanon and Egypt have also marked their offshore territories and are evaluating their potential.

But for Cyprus, still bitterly divided between a Greek Cypriot south and Turkish Cypriot north, the rewards could be more than just financial.

According to the Republic of Cyprus' president Nicos Anastasiades, this rich supply of energy could help unite the island.

"The benefits out of the exploitation of the wealth of energy is going to the interest of all the people of Cyprus whether they are Greek or Turkish Cypriots," Anastasiades told CNN.

"What I'm saying and trying to convince our compatriots is that the wealth is belonging to the state, the residents of Cyprus. You (Turkish Cypriots) have the nationality of Cyprus as well, let's find a solution on the basis as has been agreed then you will have your proportion in participating in this wealth."

Texas based Noble Energy undertook its first drilling work in Cypriot waters last summer. French firm Total and ENI of Italy, meanwhile, will start exploration later this year.

In between the ports of Limassol and Larnaca there are plans for a $10 billion facility to manage the natural gas discovered offshore.

Cypriot officials say that the reserves in the one block that has been surveyed so far, when brought to market, would represent more than 100% of the country's GDP of $23 billion dollars.

Early indications from Noble also hint that there are many millions of barrels of oil in their field as well.

With such a potentially valuable asset, Anastasiades believes it is important to take heed of the experiences of other countries with large energy reserves and for Cyprus not to be caught out by the resource curse.

"That's why we are talking about the Norwegian model," he said referring to the Scandinavian nation's sovereign wealth fund that invests a large chunk of the money generated from its own underwater oil and gas fields.

At the same time Anastasiades hopes to manage expectations as to the level of wealth Cypriots can expect to gain.

"We are trying to pass on to people that when we talk about energy we are talking about future generations and not for the present only." However it is important that they "do not have any expectations that we are going to become like the Arab Gulf Emirates and so on," he added.

Anastasiades also recognizes that external factors have the potential impact how this lucrative new industry develops in the region.

He points out that Turkey has been "violating (Cyprus's) economic zone" in recent years as they attempt to influence relations between Greek and Turkish Cypriots.

These actions may still come to impact attempts to unify the country in the future, he said, but he is confident that will ultimately not be the case.

"All of us nowadays are realizing that it's a high time to give an end to these this protracted problem. This is why I have mentioned before as an incentive the energy, the hydrocarbons and all these kinds of things."

Link to source: http://edition.cnn.com/2014/04/23/business/cyprus-president-energy-gas-oil/index.html?sr=sharebar_twitter

Can LNG Save Greece From A Russian Gas Collapse? | Forbes

8/26/2014 @ 8:16AM

Can LNG Save Greece From A Russian Gas Collapse?

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This past week, Greece appealed to the European Union for assistance ahead of a possible halt in natural gas from Russia, by way of Ukraine. The country’s heavy dependence on natural gas imports from Russia, which makes up about 60 percent of its domestic demand, has added Greece to the list of European consumers with an uncertain energy future. As tensions have continued to rise between Russia, Ukraine and most of Europe, the threat of a possible halt in gas imports has forced many to seek out possible alternatives to meet their energy needs, especially ahead of the coming winter months.

Like Italy, Greece has sought solutions both at home and abroad, including new import agreements and the possibility of domestic production. For Athens, this would mean building on existing pipeline traffic from Azerbaijan and expanding the country’s LNG capacity, which led to last week’s appeal to Brussels. In a letter addressed to European Energy Minister Guenther Oettinger, Greek Energy Minister Yannis Maniatis asked for some assurance that surplus LNG would be made available in anticipation of a delay or halt in Russian imports.

Any increase would likely work within Greece’s existing LNG infrastructure as relevant plants are long term and expensive efforts, making it unlikely they would play a part in the short term. Greece may be able to win EU support for LNG expansion in the long term as a part of a concerted effort to invest in connectivity infrastructure projects deemed to ensure energy security for European member states, but any such relief would be very long term.

One possible source of relief for Athens could come in the form of less dependence on Russian gas, which is sold the country at often prohibitively high rates compared with other European consuming countries. While any decline in Russian imports would provide plenty of reason for concern among the country’s commercial and industrial consumers, an increase in LNG could provide lower, comparative pricing arrangements.

Greece has also begun pushing for more domestic production to help ease the country’s consistent dependence on costly imports. Like many in the region, Greece has seized onto the possibility of offshore reserves as neighbors like Cyprus and especially Israel make real headway towards exploration and export revenue. In December, Prime Minister Antonis Samaras suggested that Greece could be home to 4.7 trillion cubic meters of gas could one day provide up to 25 percent of European demand. However, many critics have warned against overstating the country’s potential and the long journey from early studies to actual, viable domestic energy production.

Over the last three years, Athens has also made a concerted effort to lay claim to the Eastern Mediterranean’s recent energy rush, both as a potential transport hub for Israeli and Cypriot gas reserves. Earlier this year, Athens entered the transport conversation by offering a tender for a pipeline project that would transport about 8 billion cubic meters of gas into the European market from offshore fields controlled by Cyprus and Israel. According to a Reuters report, the project would link Israel’s Leviathan natural gas field to Europe by way of Greece through the IGI-Poseidon pipeline, managed by Italy’s Edison and Greece’s state-backed utility, DEPA.

Link to source: http://www.forbes.com/sites/christophercoats/2014/08/26/can-lng-save-greece-from-a-russian-gas-collapse/

Turning a Successful Start to a Success Story: Greek Offshore Exploration 2014 - NATURAL GAS EUROPE

August 26th, 2014

The Greek authorities officially announced the 2014 offshore exploration bidding round for 20 offshore blocks in the Ionian Sea and on the South of Crete in a conference that took place in London earlier this summer, with the support of the Greek Energy Forum. As expected, this event was received with great levels of excitement. The various publications in the aftermath of this event however did not highlight the display of commitment from the Greek authorities in on this endeavour, which has been also an achievement in itself for a country looking to re-enter the international hydrocarbon exploration arena. The clarity of the structure of the announced bidding round, along with the announcement of a well-defined timeline and coupled with an authoritative delivery to the audience, set the ground for a successful bidding round.

Άρχισε να μυρίζει «ενδιάμεσο» φυσικό αέριο | ΦΙΛΕΛΕΥΘΕΡΟΣ

Τρίτη, 26 Αυγούστου 2014 9:06 πμ  - Τελευταία ενημέρωση: Τρίτη, 26 Αυγούστου 2014 9:48 πμ

Εμπιστευτική σύσκεψη Λακκοτρύπη με ΡΑΕΚ και ΕΥΚ

Άρχισε να μυρίζει «ενδιάμεσο» φυσικό αέριο

Λευκωσία: Άκρως εμπιστευτική σύσκεψη είχε χθες ο υπουργός Ενέργειας, Γιώργος Λακκοτρύπης, με τα μέλη της Ρυθμιστικής Αρχής Ενέργειας Κύπρου και της Εταιρείας Υδρογονανθράκων Κύπρου, η οποία σύμφωνα με πληροφορίες του «Φ», επικεντρώθηκε στη στρατηγική και τους αμέσως επόμενους χειρισμούς, που αφορούν στην εξασφάλιση της Κύπρου με φυσικό αέριο για σκοπούς ηλεκτροπαραγωγής.

Οι ίδιες πληροφορίες αναφέρουν ότι στην απουσία των εμπλεκομένων με το θέμα της ενδιάμεσης λύσης, δηλαδή της ΔΕΦΑ και του κύριου αγοραστή –της ΑΗΚ– τέθηκαν επί τάπητος τα μέχρι τώρα δεδομένα, που δημιουργούν αισιόδοξες προοπτικές.

Συγκεκριμένα, οι τέσσερις προτάσεις που υποβλήθηκαν στο πλαίσιο του διαγωνισμού της ΔΕΦΑ για την ενδιάμεση λύση,  φαίνεται να είναι πολύ κοντά στις μέγιστες αποδεκτές τιμές φυσικού αερίου. Οι τιμές στις τέσσερις προτάσεις, είναι πολύ κοντά μεταξύ τους και οι τρεις προσφοροδότες (Μ&Μ, Delek, Vitol) που θα κληθούν πρώτοι για διαπραγμάτευση, αν αποδεχθούν κάποιες μειώσεις στις τελικές διαπραγματεύσεις, θα μπορούν να προτείνουν φυσικό αέριο σε τιμές που εξασφαλίζουν ελάχιστες μειώσεις στο κόστος παραγωγής ηλεκτρισμού της τάξης του 5%-8%, το οποίο αποτελεί το ελάχιστο ζητούμενο.

Στις επικείμενες διαδοχικές διαπραγματεύσεις, αναμένεται ότι οι τρεις πρώτοι προσφοροδότες θα ανταγωνιστούν μεταξύ τους με ακόμα χαμηλότερες τιμές, ενώ υπάρχει και η δυνατότητα για τον τέταρτο προσφοροδότη –τη Cyprus Gas– να κάνει τη δική του κίνηση ματ στο τέλος. Αυτό δημιουργεί ελπίδες ότι θα εξασφαλιστούν τιμές που θα προσφέρουν αισθητή μείωση στο κόστος ηλεκτρισμού.

Παράλληλα, η παράταση της ισχύος των προσφορών μέχρι τον Νοέμβριο, που αποδέχθηκαν και οι τέσσερις προσφοροδότες, δίνει ανάσες όχι μόνο στη ΔΕΦΑ για τις διαπραγματεύσεις με τους υποψήφιους μνηστήρες μιας πράξης κόστους €4 δισ. περίπου, αλλά και στην κυβέρνηση για να ξεκαθαρίσει περισσότερο το τοπίο. Κυρίως, το ξεκαθάρισμα αφορά στο αν και πότε μπορεί η Κυπριακή Δημοκρατία να εξασφαλίσει φυσικό αέριο για τις ανάγκες της Κύπρου, το οποίο προφανώς θα είναι πολύ φθηνότερο της ενδιάμεσης λύσης και αφετέρου θα εξασφαλίζει και σοβαρά έσοδα στο ίδιο το κράτος από την πώληση του αερίου. Αυτό θα διαφανεί κυρίως μετά την αποπεράτωση της γεώτρησης στον «Ονασαγόρα», αφού θα καταδείξει όχι μόνο τις ανακτήσιμες ποσότητες, αλλά και αν μπορεί το κοίτασμα να είναι σχετικά σύντομα εκμεταλλεύσιμο.

Γράφει: Πέτρος Θεοχαρίδης

Link to source: http://www.philenews.com/el-gr/top-stories/885/215216

DEKA project begins production offshore Egypt - OFFSHORE MAGAZINE

08/25/2014

Offshore staff

MILAN, Italy – Eni’s IEOC Production BV has started production from the DEKA (Denis-Karawan) project offshore Egypt in a joint-venture with BP Egypt.

The Denis South 6 subsea well is flowing 1.8 MMcm/d (63.56 MMcf/d) of natural gas and 800 b/d of condensate.

The entire project expects to see five subsea wells, installation of subsea production systems, and sealines to the El Gamil onshore gas plant. Peak production is expected in 1Q 2015 at 6.5 MMcm/d (230 MMcf/d).

Denise South 6 is the first development well in DEKA which is in the Temsah Concession Area offshore Nile Delta, Egypt, in 100 m (328 ft) water depth 65 km (40 mi) north of Port Said.

IEOC holds 50% working interest in the Temsah Concession and operates through its JV Petrobel (50% IEOC and 50% EGPC).

8/25/14

SOURCE

Egypt Key to the Development of East Med Gas | Natural Gas Europe

August 25th, 2014 

The partners in Israel’s largest offshore natural gas fields announced the signing of letters of intents to transport Israeli natural gas via Egypt’s unused export terminals. Noble Energy Israel’s Delek Group plan to deliver as much as 6.25 trillion cubic feet of gas from the Tamar and Leviathan offshore fields to LNG facilities in Egypt’s Damietta port and the coastal town of Idku. Final agreements are expected to be signed by the end of the year.

Egypt is in need for natural gas. The country is undergoing a severe energy crisis due to ongoing export obligations, a growing domestic consumption and a flat production. The closing of the deals between the Leviathan and Tamar partners on the one hand and the operators of the terminals in Egypt on the other would allow Israel the flexibility to reach export markets. Building a pipeline to Egypt would be a quick, low cost and efficient solution for Israel. Israel has been struggling to formalise an export strategy. The prospect of a floating LNG facility faded with the failure of the Israeli authorities and the Australian giant Woodside to reach an agreement. Israel has not formally expressed an intention to use Cyprus’ planned onshore LNG terminal and the likelihood of a Leviathan-Turkey pipeline decreased since Israel’s action on Gaza. Despite an amelioration of the diplomatic relations between Israel and Turkey since Netanyahu’s US-brokered apology to the Turks in 2013, the diplomatic ties remain tensed due to Israel’s stance on Gaza.

Egyptian LNG from “Made in Israel” Natural Gas | Times of Israel

Tamir Druz - Of all the options that have been explored to facilitate the export of Israeli natural gas, the use of Egypt’s two existing LNG plants makes the most economic and strategic sense. Egypt has essentially run out of the natural gas needed to supply its substantial LNG processing capacity, as declining production and growing domestic demand has necessitated the diversion of its gas supplies to meet local needs.

By our calculations, Egypt was only able to make use of 23% of its 12.2 million tons per annum of combined processing capacity at its plants in Idku and Damietta last year. This was a drop from 42% utilization in 2012, and the future looks even worse, with Egypt’s Ministry of Petroleum predicting that local consumption will start to outstrip production by next year. BG Group was compelled to declare force majeure earlier this year when it could not meet European customer commitments due to insufficient output from its Egyptian operations, and Egypt’s tab with locally operating multinational energy companies has been ballooning as a result of its need to pay market prices for gas diversions in excess of its production sharing allotment.

The Egyptian export route makes a great deal of sense for Israel as well. Egyptian President Abdel Fattah el-Sisi’s government and its media could not have more clearly expressed their opposition to Hamas and its actions during the recent escalation of Gaza’s conflict with Israel. For an Arab country to effectively side with Israel in a war is unprecedented, especially the most populous Arab nation in the world, and the recognized leader of Sunni Muslim countries in the Middle East. Egypt should also be credited with the relative quiet that has existed along the Sinai border during the conflict. Egyptian military and intelligence cooperation has undoubtedly played a key role in preventing the opening of this additional front, in spite of Hamas’s efforts.

Egypt relies on natural gas to produce most of its electricity, demand for which has been growing at the very rapid rate of 10% per year. Egypt is also one of the world’s top consumers of compressed natural gas (CNG) for transportation, which fuels almost 200,000 of its vehicles. Energy costs and shortages were a primary driver of the “Arab Spring” protests that toppled Egyptian President Mubarak, among others, and Egypt’s government cannot afford to allow its energy situation to get out of control. Finding an alternative source of natural gas to feed its severely under-utilized LNG plants, which represent an investment of many billions of dollars, would allow it to meet its local energy needs, honor its production-sharing commitments to multinational producers, restart the significant public revenue flows from LNG production and reverse its fast-growing national debt.

Many commentators correctly pointed out that the nascent Egyptian-Israeli alliance has been promoted by a shared interest in countering the Muslim Brotherhood and its Gazan affiliate, Hamas. Some have also alluded to a shared desire to stop Iran from fulfilling its nuclear ambitions. But the two nations’ joint interests extent well beyond security. It is now clear that negotiations on a gas export deal are well underway and may be concluded by the end of this year.

If they succeed, Israel’s natural gas industry will be able to convert its gas into globally exportable LNG without having to make the enormous investment required for LNG processing facilities. The cost of an undersea pipeline to Egypt will be substantially lower by comparison, and time to market would also be a fraction of that required for the construction of new LNG facilities. This option would not only generate a much higher expected return on investment, but would also considerably reduce security and environmental costs and risks for Israel.

Furthermore, this energy partnership between Egypt and Israel would fundamentally align the energy futures and interests of the two countries, in a unique and unprecedented manner. This would represent the first case, to our knowledge, of an LNG industry in a given country being supplied largely by natural gas feedstock imported from another country. Israel is known for its innovation in areas such as high-tech and medicine, and it is only natural that the Start-Up Nation has helped find a novel and inventive solution within the LNG industry as well. And in this case, it may even provide an opportunity to forge a stronger alliance with Israel’s most important neighbor.

Tamir Druz is the Director of Capra Energy Group

SOURCE

Egypt looks to secure LNG production and supply | Daily News Egypt

Egypt looks to secure LNG production and supply

Daily News Egypt  /   August 24, 2014  /   0 Comments   /   225 Views

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With its significant reserves of liquefied natural gas (LNG), Egypt has been a key exporter for regional consumers over the past decade but with growing domestic consumption and a number of fiscal constraints, the country has been looking to secure additional supplies by expanding LNG capacity.

In May the Egyptian government signed a letter of intent with the Norwegian shipping company Höegh LNG for the use of a floating storage regasification unit (FSRU), to be located on the port of Ain Sokhna for a period of five years. FRSUs regasify liquefied natural gas, a key step for expanding Egypt’s capacity to process imports.

It had also lined up LNG shipments from Algeria’s Sonatrach, Russia’s Gazprom, and France’s EDF.

By mid-July, however, the deal with Höegh had stalled, according to Reuters, prompting Egypt to reopen talks with the US-based FSRU operator Excelerate Energy.  Experts say it will take about six months after a deal has been struck for the facility to come onstream, which will likely mean further gas shortages this year.

LNG in the spotlight

Hydrocarbons currently account for 91% of Egypt’s power generation, the bulk of which comes from natural gas. Egypt has sizable gas reserves, with 2tn cubic metres as of end-2012, according to BP’s 2014 Statistical Review of World Energy. But a large proportion of annual production has been channelled towards the export market, which in recent years has brought in much-needed revenues.

However, with local natural gas production down and the country unable to meet demand, Egypt has been increasingly in need of resources for domestic consumption. Currently, limited supplies for local generation have resulted in load shedding, with blackouts in some areas lasting up to several hours per day.

As a result, gas output is being shifted away from the export market. According to BP, Egypt’s LNG exports amounted to 3.7bn cubic metres in 2013, down nearly 62% from 9.7bn cubic metres in 2010. Natural gas that was originally meant to feed the country’s two LNG export facilities is now being redirected to the local market.

However, this has created additional complications, leaving facility operators unable to fulfil their LNG delivery commitments. Unión Fenosa Gas (UFG) – a partnership between Italy’s Eni and the Spanish energy company Unión Fenosa, which operates the LNG facility located in Damietta – filed an international arbitration claim against Egypt last year following the cutoff of their natural gas supply.

Upstream potential

There has, however, been encouraging news in the upstream segment that may help increase production and allow the supply of natural gas to both LNG facilities and the local market. Both UFG and UK-listed BG Group have been in talks with companies operating out of the recently discovered Israeli Tamar and Leviathan offshore gas fields.

UFG signed a nonbinding letter of intent in May with US-based Noble Energy, the operator of the Tamar gas field, to feed its Damietta LNG facility.  In June, BG signed a similar agreement with the partners operating the Leviathan field.  Both these agreements will need approval from the Egyptian government, which according to local press reports, has said it will consider under certain conditions – namely that a portion of gas be directed towards the local market  and that UFG drop their arbitration claim.

Reducing the subsidy bill

The need to address local energy demand does create additional challenges for the state’s balance sheet. LNG exports have helped to strengthen the current accounts and boost export revenues, but these have fallen as output is redirected towards domestic consumption.

Although domestic energy subsidies have been rolled back in recent years, they continue to represent a significant burden on the state’s balance sheets, which means the combination of dropping exports and rising consumption finds the state facing reduced revenues and higher subsidy expenditures.

Indeed, fuel subsidies have skyrocketed from roughly EGP 53bn ($9.6bn) in fiscal year 2008/09 to EGP 130bn ($18.14bn) budgeted in the most recent fiscal period. In an effort to reign in subsidies, the government overhauled energy prices across the board in July. This included price increases of as much as 75% for industrial consumers and an up to 175% increase on natural gas car fuel. Reductions in the subsidy bill in fiscal year 2014/15 are expected to save the government EGP 40bn ($5.58bn), according to a statement made by Finance Minister Hany Kadry Dimian in late June.

Link to source: http://www.dailynewsegypt.com/2014/08/24/egypt-looks-secure-lng-production-supply/

Talks aim at agreement of LNG terminal | Cyprus Mail

August 24, 2014 - 4 Comments

Talks aim at agreement of LNG terminal

By Elias Hazou

A STANDING government team of technocrats and officials is to begin negotiations with the ENI-KOGAS consortium and with France’s Total with the aim of concluding LNG project agreements.

The team was given the green light to launch talks by the Cabinet on Friday. The talks will be geared at reaching an agreement for the construction and operation of an onshore liquefied natural gas (LNG) terminal at Vasilikos, a ministry statement said on Saturday.

ENI and KOGAS hold prospecting concessions on offshore blocks 2, 3 and 9 of the Cyprus Economic Exclusive Zone. ENI are the operators of the three blocks with an 80 per cent participating interest; KOGAS is a partner with a 20 per cent participating interest. Total E&P Cyprus have concessions on blocks 10 and 11.

The Memorandum of Understanding (MoU) with ENI-KOGAS is “aimed at investigating areas of cooperation related to Cyprus’ potential gas resources valorisation, with priority to the onshore LNG option,” according to an official statement at the time.

It’s understood the MoUs with ENI-KOGAS and with Total are not restricted to a land-based LNG facility, but allow for exploring other options such as floating LNG.

In contrast, the parallel negotiations with Noble Energy and Delek – with a concession on Block 12 – are focused only on onshore LNG.

The decision to start talks with ENI-KOGAS comes just as the joint venture is readying to drill their first well. It will likely take place in September at a well dubbed ‘Onasagoras’ in Block 9. The consortium’s drilling schedule is expected to span 12 to 18 months, during which they are contractually obliged to carry out at least four drills.

The drilling platform is expected to arrive offshore Cyprus in September from Mozambique. The rig is owned by Saipem, an Italian oil services group and a subsidiary of ENI.

Energy minister Giorgos Lakkotrypis on Saturday responded to criticism leveled earlier at him by the Cyprus Mail, which had suggested the minister was jumping the gun when talking up the prospects of sales of Cypriot natural gas to Egypt.

On his return from Egypt this week, Lakkotrypis said Cyprus would be able to have ‘specific talks’ with Egypt at the end of this year, upon completion of the first exploratory drilling by ENI-KOGAS. The Mail commented that, judging by the time it took Noble Energy to complete their own drilling phase in Block 12, it could take ENI years before they had an accurate picture of the quantity of gas that could be sold to Egypt.

“The comparison is false, as the contracts concluded with Noble and with ENI-KOGAS are quite different,” the minister told the Mail.

Also, ENI’s drilling rig would stay in Cypriot waters for 12 to 18 consecutive months, allowing the joint venture greater flexibility.

“This allows for back-to-back drilling, and the rig’s continuous presence means that an exploratory drill could be immediately followed by an appraisal drill at the same well, if the company so chooses,” he explained.

Moreover, the minister said his mission to Egypt had been to “explore” the possibility of selling gas to Egypt at some time in the future. Asked about the earliest date this was hypothetically possible, Lakkotrypis cited 2018 in the event the Cypriot gas were piped to Egypt, later if other solutions are chosen.

“We have not yet discussed with the Egyptians specific ways of supplying them with natural gas,” he added.

Meantime LNG talks with US outfit Noble appear to have stalled, with media reports suggesting the Americans have got cold feet about the onshore plant and are leaning toward less capital-intensive solutions, such as FLNG or even Compressed Natural Gas.

So far the proven natural gas reserves in Noble’s Block 12 are insufficient to make profitable an investment into an onshore LNG plant.

Additional gas discoveries by ENI-KOGAS and by Total may change that. But there is still a long way to go: a final LNG project agreement is followed by a Front-End Engineering Design (FEED, an engineering design approach used to control project expenses and thoroughly plan a project before a fix bid quote is submitted. The next step – and the crucial one – is a final investment decision by the companies.

Link to source: http://cyprus-mail.com/2014/08/24/talks-aim-at-agreement-of-lng-terminal/