TOTAL to Extend its Presence in Cyprus
Rumours that TOTAL may be withdrawing from Cyprus’ EEZ circulated earlier this year. The French giant seems to be however keen to extend its presence should the next geological surveys prove promising. TOTAL will be signing an agreement with the government of Cyprus to launch further exploration activities in new areas within Cypriot waters following disappointing previous surveys. TOTAL will only commence drilling if drillable prospects are identified.
Since Noble Energy’s discovery of the Aphrodite field in 2011, estimated at 4.45 Tcf, Cyprus has not made any additional discovery of natural gas in its waters. ENI started drilling in the last quarter of 2014 but the first well came out dry. The Italian company and its North Korean partner KOGAS will pursue exploration activities in Cyprus’ EEZ in 2015.
Additional discoveries are essential for the island to afford building an onshore LNG terminal on its Vassilikos coast. The project, considered strategic for the island to reach far-reaching markets and monetise its riches after its severe financial crisis in 2013, has been put on hold given the relatively modest amounts of natural gas discovered thus far. Cyprus is also considering exports to regional markets such as Jordan and Egypt. Exporting gas to Egypt could also allow Cyprus to use Egypt’s unused export terminals to reach customers.
Israel is also eyeing the regional market given the shortage of natural gas in the region: Jordan, Egypt and the Palestinians are potential customers. Deals with Israel have not yet been sealed, delayed by Israel’s domestic regulatory challenges. Developing the Leviathan field may be postponed until an agreement is reached between the partners in Israel’s largest fields and the Antitrust Regulator. Until a decision is issued by the competition authority regarding how to solve the cartel situation, agreements between Israel and its neighbours remain uncertain. Cyprus may benefit from the uncertain regulatory climate in Israel. Exporting gas to Egypt would allow Cyprus to develop its Aphrodite field.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. 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