This year, Cyprus will become the hottest oil and gas exploration target in the Mediterranean, with the start of drilling of an exploratory well by Noble Energy Inc. (NYSE: NBL) in its Block 12 offshore concession, later this month.
The well aims to verify that Block 12's preliminary natural gas estimated resources hold about 10 TCF, slightly more than the Tamar discovery. Block 12 is just one of 12 concessions in Cyprus's maritime exclusive economic zone (EEZ). When the results of the drilling are known, Cyprus plans to publish tenders for exploration rights for the other blocks.
In an interview with "Globes", Cypriot Energy Service director Solon Kassinis discussed Cyprus's natural gas potential and possible joint ventures with Israel. Officially, Kassinis's authority corresponds with that of Petroleum Supervisor Dr. Michael Gardosh.
"Globes": What is the oil and gas potential in the areas you are planning tenders for?
Kassinis: "We intend to publish tenders for licenses for 12 blocks and an additional area within Block 12 that covers 25% of its area. The total area is 45,000 square kilometers, partly in the Levant Basin, which we share with Israel, and part in the Nile Delta Basin, which we share with Egypt.
"The US Geological Survey estimates that the Levant Basin has 122 trillion cubic feet of natural gas, of which Israeli discoveries total 30 trillion cubic feet. The Nile Delta Basin has an estimated 223 trillion cubic feet of gas, and we believe that most of it is in the area of our licenses."
What about oil? Are you optimistic about the chances of finding oil at Leviathan
"I am not optimistic about Leviathan, but I am quite certain that oil will be found in Cypriot waters."
"Join forces"
These estimates, combined with Cyprus's very easy tax regime has already brought many oil and gas exploration companies to Kassinis's office, including companies that have avoided Israel out of concern for their interests in Arab countries.
Kassinis says, "Some of the oil majors have visited us, including Total, Norway's Statoil, and Chevron. Just two weeks ago, I was in Norway and they showed a lot of interest in what we're planning here."
Yitzhak Tshuva's Delek Group Ltd. (TASE: DLEKG) has proposed building natural gas storage and export facilities in Cyprus. What is your position on the proposal?
"We respect Mr. Tshuva and we strongly appreciate his offer to collaborate. But there are issues that must be clarified at the state level. For me, the most important issue is not how to produce this blessing, but how to manage it not only for our welfare, but for the following generations. That is why the two countries should join forces to work optimally.
"In my last meeting in Israel, I raised five proposals: to build a pipeline from Leviathan and Block 12 to Cyprus; to build a liquefied natural gas (LNG) facility; to build a methanol plant; to build power stations to supply electricity from Cyprus to Israel and vice-versa; and to build oil and gas storage terminals that could be used for the strategic reserves of both countries.
"It is not within my professional authority, but I think it is possible to expand cooperation to the military sphere. For example, you will secure Leviathan with your ships and submarines; why shouldn’t you also secure Block 12, which is only 33 kilometers away?"
Maybe this is place to mention Turkey's threats that it will hurt you if you begin drilling at Block 12.
"They have no choice but to respect international law. It is a country that has been acting in an oxymoronic way. It wants to join the EU, but it does not honor international treaties and law. That is not healthy behavior. I don’t believe that the Turks will make good on their threats. I know that they are trying to threaten investors and apply personal pressure. By the way, Turkey could have played a very positive role in the gas export industry because of its position as a transit country for Nabucco system."
The reference is to the Nabucco Pipeline planned to run from Central Asia to Europe.
Delek Group has applied to buy 30% of Noble Energy's rights in Block 12. What is your position on this?
"It's under review. Cypriot law explicitly states that if Noble Energy wants to give part of its rights to another company, it is subject to three criteria: experience, technical capability, and financial wherewithal."
Published by Globes [online], Israel business news - www.globes-online.com - on September 13, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011