TOTAL to Resume Activities Offshore Cyprus
France’s TOTAL has demonstrated a renewed interest in drilling for natural gas in Block 11 of Cyprus’ Exclusive Economic Zone despite previously postponing any further exploration activity in Cypriot waters, various media outlets have reported.
In January 2015, the French giant announced that it was holding off any exploration activity in Cypriot waters as it had not identified any “drillable prospects.” However, it now plans to recommence its exploration in Block 11, reports say.
Though the company has not made an official announcement, TOTAL’s decision to resume its activities off Cyprus’ coast ahead of the expiration of its license in February 2016 could have been motivated by Eni’s giant discovery in Egyptian waters: the Zohr field, located in the Shorouk Block within Egypt’s exclusive economic zone is estimated to hold up to 30 Tcf of natural gas. The close proximity of the field to Cypriot waters has signaled that more gas could be found under Cyprus’ seabed.
Eni’s two drillings in Block 9 of Cyprus’ EEZ were unsuccessful. The Italian giant is however committed to pursuing its exploration activities offshore Cyprus, motivated by its great success in Egypt.
Eni’s CEO, Claudio Descalzi, also recently visited Israel where he met with Prime Minister Netanyahu and Israel’s minister of energy Yuval Steinitz to discuss potential investment opportunities in Israel and the possibility of joint export projects with Cyprus, Israel and Egypt. Netanyahu is promoting the approval of a natural gas framework that would allow the partners in the Leviathan and Tamar fields to move ahead with the development of the Leviathan field. Delays were caused by a dispute between the owners of the fields and the country’s competition regulator who accused the partners of constituting a monopoly that would distort competition in the market.
The region is experiencing a major shift with a renewed interest from international companies in Israel, Egypt and Cyprus. Noble Energy is also expected to take final investment decisions to approve at least one natural gas development in Israel by the end of the year. The Zohr field no doubt played the role of a catalyst; it remains uncertain how it will affect Egypt’s appetite to turn towards its neighbours for natural gas imports. The field is not expected to be developed before at least 2020 and Egypt may still need Israeli and Cypriot gas to solve its pressing energy crisis as an interim solution before its indigenous gas comes to market.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat