Major Cypriot offshore gas field discovered - report

Leviathan gas field Photo: Noble Energy

The Calypso field, containing an estimated 170-230 BCM, will make it even more difficult for the Leviathan partners to sign export deals.

The Cypriot media has reported the discovery of a major natural gas field  in Cypriot economic waters, 75 kilometers off the island's southern coast. The reservoir reportedly contains 170-230 BMC of gas, 70% as much as the Tamar reservoir in Israel's territorial waters. The reservoir, which is located in bloc 6 and is called Calypso, will be developed by a European consortium composed of Italian company Eni and French company Total SA.

According to the reports, the drilling results confirmed "sufficient and encouraging signs" of a natural gas field. Cypriot Energy Minister Yiorgos Lakkotrypis said, "The findings are encouraging, but we need more time for analysis in order to provide final confirmation that there is a gas discovery. Meanwhile, I am unwilling to talk about quantities or any other matter." The final results of the drilling are expected to be published within a few days. Lakkotrypis added that the geologic structure of the sea bottom at Calypso was similar to that of Egypt's Zohr discovery.

According to Israeli energy sector sources, although the reports of the discovery were published only two days ago, rumors leaked as long as two weeks ago, and "The reports should be taken with a grain of salt, because Cyprus is currently in the middle of an election campaign."

If Calypso proves to be a real discovery, it is not good news for Israel. At a time when there are still not enough contracts to develop the second stage of Leviathan, and it is unclear when export contracts will be signed, Cyprus is likely to become one of the main players in the natural gas market.

"Cyprus will be able to export easily to Egypt's liquefaction facility at Damietta or the local market in Egypt, and can do so before Israel begins exporting there," a source with energy expertise told "Globes." In Israel, developing reservoirs and gas export plans take many years to implement. For example, the Leviathan reservoir, which was discovered in 2010, will begin supplying gas only a decade later, in 2020. Eni, on the other hand, made history by developing and connecting Egypt's huge Zohr reservoir in two and a half years. Eni is also a partner in the Damietta liquefaction facility in Egypt, which is likely to make it even easier for Cyprus to export gas to Egypt.

Eni's partner in Calypso, Total, is also one of the world's largest oil and gas exploration companies. The two partners are extremely large companies with huge equities, and will not have to raise money on the stock exchange in order to finance development, a factor that will significantly shorten the development processes.

Is Israel, which plans to begin exporting its gas, in need of rescue? The answer is yes. If the reports in Cyprus turn out to be true, Cyprus can become a significant player in the natural gas sector, and can offer more attractive prices than Israel, because Tamar currently sells gas at a relatively high price of $5.40 per BTU, a fact that is causing public controversy. It is therefore unlikely that that the price for exports will be less than the price for the domestic market, because that would be liable to generate public anger.

Published by Globes [online], Israel Business News - www.globes-online.com - on February 4, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Leviathan gas field Photo: Noble Energy
Leviathan gas field Photo: Noble Energy
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