THE GOVERNMENT yesterday tried to stay upbeat in the wake of criticism that its oil plans amounted to a flop, after just four companies expressed interest in offshore hydrocarbon exploration south of the island.
Cyprus had 11 offshore blocks on offer. Thursday’s bids concerned a US company bidding for one block, and a consortium bidding for another two.
Despite a confidentiality clause, news has fast leaked that the US firm in question is Houston-based Noble Energy – not an oil major though admittedly “a sound company”, according to Panos Papanastasiou, head of the Department of Civil and Environmental Engineering at the University of Cyprus.
“That few companies came forth was, to a certain degree, to be expected. You could even say that the presence of the American company saved the day,” he told the Mail.
Though agreeing that things could have gone better with the bids, Papanastasiou did not necessarily agree that the low interest shown was unprecedented in world affairs, as other commentators have said.
“After all, you can’t take anything for granted in this business. There are no guarantees that someone will respond to a tender,” he added.
The consortium which applied for an exploration permit in two oil blocks comprises three firms from Norway, Britain and the United Arab Emirates. The participating firms have been identified as DNO of Norway, Larsen Oil & Gas of the UAE, and Increased Oil Recovery of Britain.
But former Commerce Minister Nicos Rolandis was unforgiving in his critique:
“We have become an international laughing stock. It is unprecedented for a country to initiate an international competition, and not even a single oil giant comes forth. This sort of thing has never happened before. I am truly sad for Cyprus,” Rolandis told Alithia newspaper.
And presidential candidate and former Agriculture Minister Costas Themistocleous said the government’s bad handling of the affair in the diplomatic arena was to blame for the poor response from oil companies.
Themistocleous suggested the administration botched it by making a big song and dance over Ankara’s moves in the Mediterranean, thereby inadvertently giving the wrong kind of publicity to foreign investors keen to avoid political complications. Instead, he said, the government should have kept a low-key stance throughout.
“Unfortunately, PR considerations prevailed over a serious analysis of political and economic data in the region and globally. Those in government were more concerned with the next presidential elections rather than the future generations of Cypriots,” he said.
To get some idea of Noble Energy’s calibre, last year the company had $700 million profits, compared to Exxon-Mobil’s $37.5 billion and Chevron’s $17.1 billion.
The low interest seemed to fly in the face of government officials, who days before the submission of applications had been boasting of “oil giants” descending on Cyprus.
Solon Kassinis, head of the governmental Energy Department, reiterated yesterday that the response was “satisfactory”, but added that many more rounds of bidding would follow, where the government anticipated heightened interest.
From press reports, it can be gleaned that the two oil blocks left out of the first licensing round are the most promising in terms of potential reserves of oil and natural gas.
The two blocks, which will be opened for bidding in the second round once 3D survey data of the seabed is available, are the ones closest to Lebanon.
Speaking on CyBC television yesterday, a senior executive of oil giant BP said the company reserved its rights for the second round, since the two blocks in question seemed to offer the best prospects.
Meanwhile it was reported yesterday that on Thursday Turkish fighters carried out flyovers in Paphos.
The violation of Cypriot airspace occurred at around the same time the government was receiving the oil applications, it was reported.
Foreign Minister Erato Kozakou-Markoulli said the Republic had reported the breaches to relevant international organisations.
“I expected this behaviour from Turkey,” Markoulli told state radio.
She said a number of airspace violations by Turkish aircraft had been recorded in the past six months.
“This is an attempt by the Turkish military to emphasise its presence in the region. But I am positive that the international community, which stands for international law and not Turkey’s lawlessness, will be by Cyprus’ side,” she added.
She said the fact there had been a response to the bids despite the Turkish threats “confirms that the Republic is a sovereign state.”
