articles | 22 April 2015

Energy Minister rejects poor assessment of natural gas prospects

Energy Minister Giorgos Lakkotrypis recently denied reports that oil and gas companies are all but on their way out of Cyprus after coming up dry in their prospecting.

The minister was responding to a report in the latest edition of the Middle East Economic Survey (MEES). The publication had noted that the two back-to-back drilling duds for the ENI-KOGAS consortium in offshore block 9 appeared “to mark the end of the road for exploration offshore Cyprus – possibly for several years.”

The consortium’s exploration contract expires in February 2016, and until then they will not be undertaking further drilling operations. The government could agree to extend and revise the agreement.

“MEES understands that if ENI seeks an extension then Nicosia will grant it, but ‘this is a big if’,” the publication said citing a source.

On the Aphrodite play in the block 12 concession, MEES cast doubt on whether the prospect can be monetised, at least at this stage.

It noted for example that whereas the partners are poised to present their development plan for Aphrodite, Delek has made it clear they do not intend to pay for a pipeline to Egypt.

Though Lakkotrypis was evidently responding to a synopsis and translation of the MEES item as carried by the Cyprus News Agency a day earlier, he dismissed the notion that Cyprus’ natural gas plans have reached the end of the line.

“As far as exploiting the Aphrodite reservoir, we have repeatedly stated that a huge effort is underway. You can see the developments, they are methodical and gradual,” the minister said.

“There is intense regional interest for the purchase of natural gas, and naturally I do not share the views expressed in the report,” he added.

On ENI-KOGAS, Lakkotrypis said the companies have asked for more time to re-assess their geological model, and the government is considering their request.

The government has meantime reached agreement with Total, whereby the French energy giant has been given leeway to conduct further surveys “to better evaluate Block 11.”

In January Total let it be known it had identified no drilling targets in its two offshore concessions, and was considering pulling the plug on their operations. The government, keen to keep the company here, agreed to renegotiate their initial contract, under which they were obligatedto drill two wells.

Similarly ENI were required to drill at least four wells by February 2016. But after two misses, and having spent in excess of $300m, they have put their programme on the backburner.
However Politis reports that the Italians and the government are close to an agreement to extend the contract by two more years, up to February 2018.

The extension request is being viewed positively by the government and its petroleum consultants, Beicip Franlab. According to the daily, a senior ENI official will be on the island next week to meet Lakkotrypis, the purpose being to put the final touches to a deal.

ENI are now proposing to carry out the two drills they ‘owe’ Cyprus in 2017, Politis said.

Speaking to the press earlier, energy experts hazarded a guess that should ENI again bore down into the bedrock, this would likewise be in Block 9, but at a different site, closer to the geological formation within which lies the successful Aphrodite prospect. That location is in the southern section of Block 9, just above adjoining Block 12.

Source: Cyprus Mail

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