articles | 22 November 2013

ENI-Kogas to bid for blocks 5 and 6

The government is to begin talks with an Italian-South Korean consortium that may lead to the award of gas and oil exploration concessions for offshore blocks 5 and 6.

The decision to negotiate with the ENI-KOGAS consortium – which already holds concessions on three other blocks in the Cyprus Exclusive Economic Zone – was reportedly taken by the Cabinet yesterday on the recommendation of the energy minister. Deputy government spokesman Victoras Papadopoulos told newsmen that the minister did brief the Cabinet on the second licensing round and on blocks 5 and 6, but he stopped short of confirming a decision had been made on the subject. The government released no statement and the energy minister could not be reached for comment.

Energy minister Giorgos Lakkotrypis had said in May that the government was closing the second licensing round, but added that an additional six-month extension would be granted only for blocks 5 and 6. It would seem that the government has decided to press ahead before the new deadline expires. News reports said the administration has until early December to clinch a deal with the Italian-Korean consortium. It was also reported that Lakkotrypis was due to contact ENI-KOGAS and invite them to negotiations. In the event that no agreement is reached, it would then be up to the government to decide if and when to launch a third licensing round.

During two licensing rounds so far (in 2007 and 2012) the government has issued exploration licenses for blocks 12 (Noble Energy), 10 and 11 (Total) and2, 3 and 9 (ENI-KOGAS). ENI-KOGAS was one of a number of companies and consortia that bid for block 6 during the second round. It additionally bid on block 10, which was awarded to French energy giant Total. The Italian-Korean consortium also put in the sole bid for block 5. Offshore blocks 5 and 6 lie southwest of the island, and are among the areas which Turkey claims fall within its own continental shelf. Earlier this year, in an attempt to defuse tensions in the eastern Mediterranean, US ambassador in Nicosia John Koenig requested that Cyprus does not allow exploration rights to blocks 5 and 6. Turkey has also expressed an interest in exploring blocks 4, 5, 6, and 7. 

This week Turkey’s official news agency Anadolu reported that the country’s state-run petroleum company TPAO plans to establish four offshore drilling sites next year, one being deep-water drilling, in a bid to expand domestic oil and gas supply. The report did not specify the sites’ locations.

Cabinet decides to set up new Hydrocarbons Service

The Cabinet has decided to create a dedicated Hydrocarbons Service within the ministry of energy and commerce. According to deputy government spokesman Victoras Papadopoulos the new department’s chief remit are offshore activities and infrastructures for natural gas, including “facilities at the energy centre at Vasilikos and in particular the construction of a terminal with the aim of selling natural gas in international markets.”

The Hydrocarbons Service will also monitor contracts signed with concession holders, and deal with the licensing-related issues as well as issues related to exploration and development.
It’s understood that the new Service will form part of the ministry’s Energy Service and will not replace it.

Source: Cyprus Mail

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