NICOSIA
Energy giants ENI of Italy and Total of France signed exploration contracts with the Cyprus government on Thursday to drill for oil and gas off the Mediterranean island’s south coast.
The signings complete the island’s third licensing round in which US giant ExxonMobil with Qatar Petroleum also signed a contract on Wednesday to explore offshore.
Cyprus needs to find more reserves to make a proposed onshore liquefied natural gas plant that would allow exports by ship to Asia and Europe financially viable.
The newly licensed blocks are close to where ENI made a huge find in Egypt’s offshore Zohr field that could hold 850 billion cubic metres (30 trillion cubic feet) of gas.
The record Zohr find has raised hopes that there is more untapped wealth to be found off Cyprus.
“The Republic of Cyprus, by exercising its sovereign rights, continues unabated to implement its strategy for advancing the exploration and exploitation of its offshore wealth,” Energy Minister George Lakkotrypis said at Thursday’s signing.
He praised ENI and Total’s commitment to explore Cyprus energy reserves.
“Their continued commitment, despite the challenges faced by the global oil and gas industry, allows us to be optimistic for the prospects of our hydrocarbon resources,” Lakkotrypis said.
A total of 12 exploration wells will be drilled in the newly licensed Blocks 6, 8 and 10.
Block 6 is a joint venture between ENI and Total, block 8 has been secured by ENI and ExxonMobil with Qatar Petroleum has Block 10.
Cyprus will receive a total of 103.5 million euros in signature bonuses from the contract signings.
ExxonMobil and Qatar Petroleum said they have begun planning for drilling operations and intend to drill a first exploration well in 2018.
US firm Noble Energy made the first find off the southeast coast in 2011 in the Aphrodite field (Block 12), which is estimated to contain around 127.4 billion cubic metres (4.54 trillion cubic feet) of gas.
Israeli firms Delek and Avner have a 30 per cent stake in the venture. Noble has handed over a 35 per cent share to Britain’s BG International.
Block 12 has been declared commercially viable but an action plan on the next steps has yet to be finalised.
Cyprus and Egypt are looking into the possibility of transferring gas from the Aphrodite field to Egypt via an undersea pipeline. Cyprus hopes to begin exporting gas, and maybe oil, by 2022.
Italian-South Korean venture ENI-Kogas has so far failed to discover any exploitable gas reserves in deep-sea drilling off the island.
ENI already has the right to exploit three blocks (2, 3 and 9) in Cyprus’s exclusive economic zone that borders Egypt’s gasfields.
Total, and ENI who took an equal share with the French firm in Block 11, are preparing for exploratory drilling off the island’s south coast sometime this year.
