Lakkotrypis said financial considerations also played a role in Total’s decision not to go ahead with exploratory drilling and the government is now in talks with the company about its future intentions.
“The company informed us months ago that it had difficulties finding drillable structures or targets in block 10 and block 11 for which it received a license,” Lakkotrypis said. “In September, they informed us they couldn’t find a drilling target. They said they can’t do so as they cannot find anything that justifies this. This development stands in norelation to Turkish provocations”.
Total was one of the15 companies that participated in Cyprus’s second oil and gas licensing round in 2012, after in December 2011, the Houston-based Noble Energy Inc. announced Cyprus’s first discovery in its exclusive economic zone. Noble’s finding of up to 8 trillion cubic feet was subsequently revised to less than half. On December 19, the Energy Ministry said the Italo-Korean consortium of EniKoGas found no exploitable reserves in the Onasagoras field in block 9, after drilling as deep as 5,800 meters.
Lakkotrypis said Total knew from the beginning that it “was operating in a high risk area” for which no “special” seismic data existed like in the case of the Levantine Sea, the easternmost part of the Mediterranean, on the other side of the Eratosthenes mount, which lies 100 kilometres south of the western part of Cyprus.
“We knew that block 10 and block 11 are a new geological structure,” Lakkotrypis said. “There is the Eratosthenes seamount which apparently separated the creation of material when million years ago, natural gas was created in in the Levantine Sea and the Nile Delta. We knew that block 10 and block 12 were from a geological point of view very difficult, and the oil price situation does not help either”.
The price of oil, to which gas prices are indexed, fell below $50 per barrel in recent weeks from $115 in July.
Lakkotrypis said the government is expecting to be briefed by the company on whether its decision not to go ahead with drilling is final, adding that discussions involve “other tasks,” including geological surveys the company could carry out in the area even as a “mutually acceptable solution” appears out of reach. “The issue will be clarified next week finally,” he said.
Total has “contractual obligations,” Lakkotrypis said and added that it may have to pay a due performance penalty.
The legislative and regulative framework are likely to prevent the government from granting Total a license for an alternative exploration area he said and added that the Eni-KoGas programme continues as planned, as well as the exploitation programme for the Aphrodite finding in block 12.
Source: Cyprus Mail
