Claudio Descalzi, CEO of Italian energy giant Eni, announced yesterday that the new gas reservoir discovered by Eni and French energy company Total off the coast of Cyprus could contain more than 230 BCM of gas, and contains not less than 170 BCM. Speaking at a press conference in Cairo, he said that the geological structure of the Calypso field was similar to that of the Egyptian Zohr field, which Eni developed.
Descalzi added that the region could become a natural gas power if everyone pooled their resources. "The new reservoir may be connected to Zohr, depending on its dimensions," he said. Assuming that it is not substantially larger than 230 BCM, the newly discovered reservoir is medium-sized by Israeli standards, between the size of the Karish and Tanin reservoirs and that of Tamar.
The reservoir was discovered in Block 6 Offshore Cyprus with Calypso 1 NFW, 80 kilometers south of the Cypriot coast. The rights to drill the block are owned in equal shares by Eni and Total. The fact that Calypso's geological structure is similar to that of Zohr could lead to further successful drillings, thanks to more focused exploration.
Eni has been present in Cyprus since 2013 and has interests in six licenses located in the EEZ of Cyprus (in Blocks 2, 3, 6, 8, 9 and 11), five of which are operated. Eni and Total will not need to raise capital to develop Calypso, which will shorten the process considerably.
Export potential
The gas in the new discovery will presumably be exported, since Cyprus's potential for consumption of natural gas is estimated at just 1 BCM annually. Cyprus still uses polluting fuel oil to produce electricity. To abide by the European program for reducing polluting emissions and to switch to using natural gas immediately, Cyprus is gearing up for imports of liquefied natural gas.
The obvious potential export customer for Cypriot gas is Egypt, either for the domestic Egyptian market or for the Damietta liquefaction plant, in which Eni is a partner. The new reservoir could turn Cyprus into a significant player in the Middle East natural gas market and a competitor to the Leviathan reservoir in Israel, for which the export contracts required for development of stage B have not yet been signed.
Up to now, only one gas reservoir, Aphrodite, has been discovered in Cypriot waters. Aphrodite is owned by Israeli company Delek Drilling, Noble Energy, and Shell. The reservoir, which contains 120 BCM of natural gas, was discovered in 2010, and has yet to be developed. Development is meant to be carried out together with stage B of the development of the Leviathan reservoir in Israeli waters, which is only 30 kilometers from Aphrodite, in order to reduce costs and use only one drilling platform.
Cyprus is in a delicate political situation because of its relations with Turkey. Since 1974, the island has been divided into two separate entities: the Turkish section in the north and the Greek section in the south ruled by the official Cyprus government recognized around the world. Cyprus has agreements on economic zone borders with Israel, Egypt, and Lebanon. Turkey, however, claims part of the Cypriot zone, including Block 6 Calypso.
The new gas discovery is liable to inflame the conflict between the two countries. According to international media reports, after Eni's official announcement of the discovery, a Turkish naval ship attempted to block Eni's drilling vessel Saipem 1200.
Published by Globes [online], Israel business news - www.globes-online.com - on February 13, 2018
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