Total Reconsidering Presence in Cyprus
The Eastern Mediterranean is facing all sorts of difficulties. In Israel, the Antitrust Regulator is threatening to break Noble and Delek’s partnership in the Tamar and Leviathan fields for allegedly constituting a cartel; Lebanon has not yet launched its first licensing round, delayed by political rivalries and deadlocks that have prevented the government from issuing two essential decrees; and Cyprus has put its onshore LNG project on hold until further gas is discovered off the island’s coast.
Since its discovery of the Aphrodite field estimated at 3.6 to 6 Tcf and located in Block 12 of its Exclusive Economic Zone, Cyprus has not made another gas encounter in its waters. Searching for gas in Block 9 of the island’s EEZ, ENI's first attempt in 2014 was unsuccessful. The Italian company is now undergoing further exploratory activities in another structure within block 9. ENI is scheduled to drill four wells by next year and its current drilling programme is ongoing.
TOTAL, licensed to drill in Blocks 10 and 11 of Cyprus’ maritime waters, may pull out of Cyprus. Surveys on Blocks 10 and 11 conducted by the French company did not reveal any potential targets for drilling. The minister of energy of Cyprus confirmed that TOTAL may be reconsidering its involvement in exploratory searches off the island. The company is said to be in talks with the government over the possibility of additional working areas off the island’s coast.
TOTAL's pull out may significantly challenge the island's energy plans and its hopes of financial recovery directly linked to successful exploratory results. Cyprus has put on hold an onshore LNG project at Vassilikos until further finds have been made. It was hoped that TOTAL would commence exploratory drilling in 2015 and that additional gas encounters would justify the commercial viability of the onshore LNG terminal.
Failing oil prices and the impact on gas pricing may constitute an additional deterrent for companies such as Noble and TOTAL to undertake projects in the Eastern Mediterranean. The Levant basin is believed to hold substantial amounts of hydrocarbon, but only drilling will prove such quantities exist.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. She reads International Relations and Contemporary War at King's College London focusing on Natural Resources and Conflict. 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