ENI, Cyprus to Sign LNG MOU
The Cypriot minister of Energy Yiorgos Lakkotrypis met with the high management of ENI in order to finalise an MOU agreement for the participation of ENI in the island’s LNG project. A similar document was previously signed with Total and Noble and Total. Cyprus’ multi-billion dollar LNG plant would allow the island the flexibility needed to export its gas to the customers of its choice. The project is now pending further exploratory results that would ensure its commercial viability. Cyprus’ Aphrodite field in Block 12 of the island’s exclusive economic zone was downsized by Noble to a range of 3.6 to 6 tcf of natural gas, quantities that do not justify alone the pursuit of the endeavor.
Total, Eni-Kogas are scheduled to start exploration activities towards the end of 2014. The recent meeting between the Cypriot minister and the italian giant indicated however that the company is now considering commencing its work offshore the island around August 2014. The MOU between the Cypriot government and ENI is only pending a decision of the council of ministers and is expected to be signed shortly.
The discovery of additional amounts of gas under the island’s seabed would ensure the completion of the LNG terminal in Vasiliko on schedule and without the help of other Eastern Mediterranean players. Cyprus had previously urged Israel to pool costs with the island in order to complete the plant but Israel has not to date formulated a decision in this direction.
ENI’s accelerated involvement could be explained by the recent resumption of talks on ending the division of the island. Backed by the Americans, the talks will be held under UN supervision. Both President Nicos Anastasiades and his Turkish counterpart Dervis Eroglu seem to want a solution to the Cyprus problem.
While all previous talks failed to reach a solution, the existence of abundant reserves of natural gas in the region could this time play a tremendous role in solving the Cyprus problem. Should the division of the island be resolved, a pipeline to Turkey through Cyprus’ EEZ would allow Eastern Mediterranean gas to reach a Russia-dominated Europe.
The complicated regional geopolitics have threatened to deter investors from injecting large amounts of funds in the development the Levant basin’s hydrocarbon riches. Also remains pending the Israeli-Lebanese maritime border conflict. While the current rivalries and disputes have not completely halted gas explorations, a resolution is necessary for the long term prosperity of the energy industry in the region.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Email Karen on firstname.lastname@example.org. Follow her on Twitter: @karenayat