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ENERGY: Egypt wants Cyprus gas; pipeline to LNG plant

26 November, 2014

Egypt is willing to take as much of the future natural gas supply that Cyprus can export, to satisfy its growing energy deficit and power its rapid population growth, its energy minister said after a meeting in Nicosia.



Egyptian Oil Minister Sherif Ismail told his Cypriot and Greek counterparts that his country is willing to receive as much gas as Cyprus is able to export, a declaration that could also calm local fears that future upstream production would have to be piped north to Turkey in order to reach Europe.
“Egypt has a very huge (natural gas) infrastructure and can accommodate the production coming from Cyprus,” Ismail told reporters.
Egypt had a shortfall of about 700 mln standard cubic feet that needed to be met by imports, Ismail said after talks with host Energy Minister George Lakkotrypis, adding that the possibility of re-exporting Cypriot gas from Egypt was also an option.
The first output from any offshore Cyprus gasfield is not seen any time before 2020 or 2021 at the earliest.
Laying a southward pipeline also makes better economic sense than building a land-based LNG plant that experts say is not viable with the current estimates lying in the Cyprus gasfields.
Lakkotrypis said the best way for Cyprus to export to Egypt was directly via a pipeline.
“During the next two months we will have before us a technical study about the options regarding these exports,” he said.
US-based Noble Energy, exploring for hydrocarbons in Block 12 of the Cyprus exclusive economic zone (EEZ) since 2011, has settled for an estimated 3.6 trln cubic feet of reserves, but plans to drill further exploratory wells in other areas of the block, dubbed ‘Aphrodite’.
Noble’s junior Israeli partners, Delek and Avner, involved in similar joint ventures in the giant adjacent Leviathan field, recently revised their estimates for ‘Aphrodite’ by 10% saying reserves there could even reach 4 tcf.
Whatever the case, anything below 6 tcf makes an onshore LNG plant not commercially viable, which would raise a further question of how to export liquefied natural gas to international customers.
A senior Noble executive has also considered the idea of a floating LNG plant (FLNG) that would liquefy the gas at source and load onto LNG vessels.
In September, the Italian-Korean consortium ENI-Kogas began deep sea exploratory drilling and expects to announce its first test results by the end of December, while French Total is also expected to embark on drilling ventures in its own licensed gasfields during the first half of 2015.
Lakkotrypis, Ismail and the Greek Minister of Environment, Energy and Climate Change, Yiannis Maniatis, issued a joint declaration on Tuesday in their first meeting after their heads of state held a meeting in Cairo on November 8 and agreed on cooperation on energy and regional security matters.
At the time, the tripartite leaders’ agreement said it was not aimed to any country in the region and was open to others joining this new alliance, hinting at Israel and Lebanon.
In Nicosia, the three energy ministers “expressed their readiness to examine ways and means for the optimal development of hydrocarbons.”
The joint declaration said that “the ministers had the opportunity to reiterate their shared conviction that the discovery of important hydrocarbons reserves in the Eastern Mediterranean could and must serve as a catalyst for a broader cooperation on a regional level, contributing thus to the peace and stability in the region.”
Areas where the three will see immediate cooperation include environmental standards in offshore hydrocarbons operations, security of offshore hydrocarbons operations, energy infrastructure, research and development, and institutional expertise and capacity building.
Meanwhile, Lebanon’s Foreign Minister Gebran Bassil will be in Cyprus on Wednesday for talks focusing on energy issues, the Cyprus problem and bilateral concerns.
An official announcement said Bassil will first meet with his Cypriot counterpart Ioannis Kasoulides and will then be received by President Anastasiades, followed by talks with Lakkotrypis.
Cyprus, Israel and Egypt are the only three in the eastern Mediterranean that have delineated their EEZs and have auctioned exploration and production licences to energy companies. Greece is in that process and needs to conclude delineation agreements with Egypt, while Lebanon has fallen behind, due to internal political conflicts and has yet to ratify the EEZ agreement with Cyprus.
In the absence of stable government in Beirut, licensing has also been postponed until well into 2015, while the war in Syria and the state of conflict with Israel, as well as a dispute over Israel’s reach into what Lebanese call their own EEZ, also prevents a three-way agreement being reached with Cyprus on common maritime territories.