A CABINET decision has paved the way for speeding up the process to start drilling for hydrocarbons in Cyprus’ Exclusive Economic Zone (EEZ) before the end of the year, said Commerce Minister Antonis Paschalides yesterday.
Cabinet took the decision on Friday, authorising Paschalides to free Texas-based company Noble Energy from its obligation to hold a lengthy tender process for the supply of equipment to begin drilling for natural gas.
Noble has a concession to explore for hydrocarbons in an offshore field south-east of Cyprus. Bypassing the tender process allows Noble to make use of drilling equipment currently being utilised in Israel’s EEZ, which could be made available in August, opening the way for drilling to start in Cypriot waters as early as September.
This could save the US company millions of euro in costs, translating into higher earnings for Cyprus, should the company find and successfully extract natural gas from the 1,250 square mile area known as Block 12.
Paschalides yesterday confirmed reports in Politis on the decision to circumvent legislation on the tender process.
“Basically (Friday’s) cabinet decision makes easier certain procedures so that under certain preconditions and as long as we are satisfied, yes, we can speed up the entire process for the drill,” he said.
The decision was based on a proposal of the commerce ministry following consultations with the interested parties, he added.
Not only could this expedite the process, but it could also mean lower costs in the search for hydrocarbon reserves in Cyprus’ EEZ.
“For example, instead of paying for moving a platform from one part of the world to another at a cost of €20-25m, we have the option of using one very close by at a fraction of the cost, let’s say for €1m,” Paschalides told the Sunday Mail.
Noble is currently working with Israeli company Delek to find and extract gas reserves in neighbouring Israeli waters, where the drilling equipment in question is now based.
The minister highlighted that Noble has to meet certain preconditions before the government gives the go ahead to bypass its obligation to invite tender bids for drilling equipment. One such condition will almost certainly entail a guarantee that the drilling date be brought forward.
Asked to comment on reports that the starting date for drilling could be as early as September, Paschalides refused to specify, saying only that Noble would be expected to start drilling before the end of the year.
Regarding potential cost-saving, the minister clarified that the Cyprus Republic bears no burden on the cost of exploring for possible hydrocarbon reserves in Cypriot waters. However, contrary to press reports, Paschalides said Cyprus does have the right to a fixed share of the profits should Noble find and extract natural gas.
“Reports that Cyprus has given Block 12 to Noble for free are rubbish. Of course the state will get a share of that,” he said.
Where Cyprus has to gain is if Noble keeps its drilling costs down, as those costs will be subtracted from the total sum from which Cyprus’ share will be calculated.
“There are a lot of reports going around. We don’t even comment on them because we don’t consider them serious. They’ve even accused us of not using consultants, though we’ve hired the best consultants in the world, and we’ve been told that we’ve secured one of the best contracts in the world.”
The minister also said the government was very close to reaching a decision on other related issues, including the type of terminal that would be built in Cyprus to handle and store natural gas, as well as contracts for interim supplies of natural gas until the island can exploit its own possible reserves.
“We are getting closer to reaching a decision,” he said.
Asked whether the government was still looking at the options of compressed or liquefied natural gas, he said: “Nothing’s been excluded, we’re looking at all options.”
The minister refused to comment on reports yesterday that President Demetris Christofias would meet with Noble officials this week to discuss a range of issues regarding Cyprus’ energy plans.
Meanwhile Delek, a partner of Noble in the Israeli gas finds, has proposed the creation of a liquefied natural gas facility on the island to process deposits Israel has discovered offshore and which Cyprus hopes to uncover.
