THE CHANCES of there being oil and natural gas reserves in the seas surrounding Cyprus are high according to initial data from seismic surveys, Industry Minister George Lillikas announced yesterday.
The minister told reporters gathered at a news conference that these estimates followed the positive results of a study carried out in an area not far from the median line separating the two countries’ territorial waters.
“We do not want to raise premature and great expectations among the public. What we can say is that the first messages we have are positive and encouraging,” Lillikas said.
Asked if the early data suggested oil or natural gas, Lillikas said “Oil and natural gas. Both”.
However, he was reluctant to go into detail regarding the exact findings of the study – commissioned by the government and carried out by Norwegian oil services company, Petroleum Geo-Services (PGS).
PGS has completed two-dimensional seismic surveys south of Cyprus, the data of which is currently under technical evaluation.
The studies by PGS began on March 3 of this year and ended on May 5.
Responding to criticism from opposition DISY, Lillikas made it clear that the agreement with Egypt was new and began with his first visit to Cairo, on July 19, 2005.
“There would be no need for today’s news conference, if the DISY leadership hadn’t expressed opinions and positions that caused confusion to the public,” Lillikas said.
The Minister referred to two agreements signed with Egypt, the first involving the joint exploitation of oil or/and natural gas reserves that could possibly be found in the median, on the verge of the exclusive financial zone of the two countries.
The second agreement involves the exchange of scientific and technical information.
Within the framework of these agreements and Egypt’s intention to offer help, Lillikas said Cyprus could take advantage of Egyptian data directly related to the island, so unnecessary expenses could be avoided and the success rate on drillings increased.
He referred to the success of three drillings made by Shell, which were carried out in Egypt’s exclusive financial zone and yielded positive results.
It is estimated that natural gas reserves in the seas surrounding Egypt are as high as 67 trillion cubic feet, while the guaranteed reserves of natural gas in the Gaza area are estimated at 300 billion cubic feet.
Lillikas said agreements would also be signed with other countries that neighbour Cyprus’ exclusive financial zone of Cyprus, so there would be no problems during excavations of reserves.
He also said the Cabinet had authorised the Energy Services to prepare the regulations that concern Law 99 of 2004, by specifying the legal, technical, commercial, environmental and political conditions, and also the framework within which petrol companies will be licensed for similar studies and exploitation of possible oil reserves in Cyprus’ territorial waters.
In this way, the Cypriot government would be able to choose its partners by ensuring the best financial conditions, he said, at the same time ensuring its best national interests.
The cost of the study was borne by PGS. The government, said Lillikas, would have no expenses, but would benefit from selling the results of the study to other countries.
He was reluctant to offer an estimated income or reserves that may be found in island’s territorial waters.
Responding to DISY’s claims that the state would be taking on costs of hundreds of millions of pounds while these costs should be taken on by the oil companies, Lillikas said the state hadn’t paid any expenses so far and wouldn’t be doing so in the future.
Lillikas said Cyprus had recruited French consultants, Beicip Franlap, to analyse the PGS data and prepare their own report.
The Norwegian company will be permitted to sell its data to interested companies, with a share of the revenue being diverted to the Cypriot government.
Lillikas said permission for exploration and drilling in research blocks would be permitted after assessment of tenders. Contracts would be issued under production sharing agreements in which the state would reap the largest proportion of revenue, he said.
