CYPRUS will definitely know by Spring 2012 whether there are hydrocarbon deposits in its territorial waters as a senior energy official appeared certain of their existence.
Solon Kassinis, the head of the energy department at the trade and industry ministry said he was “1000 per cent” certain there were natural gas deposits in an area inside the island’s exclusive economic zone that neighbours that of Israel.
Noble, a US firm which has a concession over one Cypriot offshore block, is contractually obliged to start drilling between October 2011 and October 2013, Kassinis told parliament.
Noble and its Israeli partners recently made one of the largest deepwater gas finds of the past decade at Leviathan, an offshore field 34 km away from the Cypriot block.
Leviathan contains an estimated 16 trillion cubic feet (tcf) of natural gas, with another 8.4 tcf estimated at an adjacent Israeli field, Tamar.
“They (Noble) are interested in drilling late this year (or) early next year,” Kassinis told the House Trade committee. “I expect it will be apparent by March 2012.”
The date of the drilling will be discussed between the two sides in February.
The island signed an agreement with Noble in 2008, after its first licensing round generated little interest in 2007.
“We expect a second licensing round after the drilling, which will generate a lot of interest,” Kassinis said.
Trade and Industry Minister Antonis Paschalides told the committee that if reserves do exist, the island would be able to tap them in around seven years.
“We will not have our own natural gas in two to three years,” the minister said.
Paschalides reiterated that the government would take into consideration the island’s potential reserves before a final decision on supplying the island with natural gas.
This seems to throw into doubt initial plans of signing a big contract with a foreign supplier.
A competitive negotiation process to supply the island with liquefied natural gas concluded with Royal Dutch Shell – the others were British Gas and BP – making the most competitive offer, with bid of around €4.5 billion for 20 years.
Reports of that sparked reaction with critics questioning the wisdom of such an endeavour.
The opposition even claimed the whole procedure had been shady, though no proof had been offered to back this.
DEFA, the public company tasked with handling the advent of natural gas said yesterday it had not made any recommendation to the government to accept any proposal and no reply had been given to any of the three short-listed companies.
DEFA chairman Costas Ioannou said Cyprus was not legally bound and “at the moment the state has the luxury of taking any decision it wanted.”
However, EDEK MP Giorgos Varnava suggested some sort of commitment had been made to Shell.
Varnava said during the briefing of his party, Paschalides and the electricity authority’s director stressed that if the agreement with Shell was delayed, Cyprus’ credibility would be hurt.
