First indications on hydrocarbon reserves of EEZ around Christmas

The Minister reiterated President Demetris Christofias’ remarks that Turkish Cypriots as citizens of the Republic of Cyprus can enjoy in the framework of a united island the benefits Cyprus’ natural wealth. The President also pointed out that the exploitation of any possible natural gas reserves in Cyprus’ EEZ can potentially motivate the attainment of a solution to the Cyprus problem, stressing that Turkey, which occupies Cyprus’ northern third since 1974, has now “a golden opportunity to prove itself to be a true peacemaker in the area of the Eastern Mediterranean”.

Cyprus, she said, will be in a position to contribute to the energy security of Europe through the provision of additional sources of energy and through Cyprus’ possible participation in a new energy infrastructure, linking Europe to sources of energy, something that will enhance Europe’s energy security.

As regards the 2nd round of licensing for explorations in Cyprus’ EEZ, Antoniadou noted that the Republic of Cyprus is proceeding after a formal decision by the Council of Ministers with the preparation of documents that will be published to invite interest by companies to participate in the 2nd round.

“We hope to have the relevant documents ready before the end of this month so we can proceed with the formal announcements,” she noted, adding that currently the effort is to see “how we can improve the model production-sharing contract that had been used in the 1st round of licensing.”

Antoniadou said that many companies have bought the data that have been produced of the geophysical and seismic studies and that this is an indication of interest on behalf of foreign companies. There is also a lot of interest by foreign investors in areas of services and products that find themselves around the main process of exploiting or transferring hydrocarbons, she added.

Cyprus granted in October 2008 the exploration license for block 12 to Noble Energy, which began exploratory drilling on September 18. On November 15, Noble announced that Cyprus Block 12 natural gas gross resources are estimated at 3-10 Trillion cubic feet (tcf) with a 60% probability of geologic success

Antoniadou said that with the findings of hydrocarbon results recently in Israel and before that in Egypt and with the prospects of identifying such results also in the Exclusive Economic Zone of Cyprus, countries in the area are faced with the challenge of managing these new variables with ultimate responsibility so as to improve and not to destroy the prospects for current and future generations.

“We expect to have some first indications about the possible existence of hydrocarbon reserves some time around Christmas”, the Minister said, explaining that if these are positive there will be a series of evaluation tests to establish the consistency and the extent of a possible reservoir so that this could also help in the definition and determination of possible kinds of infrastructure that will be required to explore possible reserves.

She noted that if quantities identified are sufficient to satisfy the domestic market then we are talking about one kind of infrastructure which is simpler. If quantities are sufficiently large then, we are going to speak about exports and then the infrastructure relating to an export effort is more complex especially in this entails liquefaction, she added.

Antoniadou stressed that any plans about the infrastructure have to have a long term view so as to include possibility of identifying reserves in all the 13 sites of Cyprus EEZ. The Minister noted that the government has sought the advice of experts on such matters.

She said that the identification of hydrocarbon reserves in Cyprus’ EEZ will open wide and bright prospects for both current and future generations of Cypriots.

Antoniadou said that as part of this new energy landscape that is being created in the Eastern Mediterranean, opportunities arise for all countries in the area to treat this as a challenge ahead, underlying that this endeavor can contribute to peace and cooperation and the resolution of problems that currently exist so that relations can be normalized and can all proceed – Cyprus, Turkey, Greece, Israel, Palestine – as partners of peace in the future.

She stressed that Turkey now has a golden opportunity to prove itself to be a true peacemaker in the Eastern Mediterranean by respecting the sovereignty rights of all EU member states through both worlds and actions and by truly contributing to the success of the peace process with reference to Cyprus, through the encouragement of the Turkish Cypriot leadership to work for an agreed solution of the Cyprus problem, on the basis of the commonly agreed framework of the bizonal, bicommunal federation with political equality as provided by UN resolutions.

Turkey, she continued, has a lot to benefit from the solution of the Cyprus problem since the solution will lead to the normalization of relations between Cyprus and in that way enable the cooperation between the two countries even in the area of energy.

Asked about the government’s position on establishing a national oil company in Cyprus, Antoniadou noted that this is one of the possibilities that the government is contemplating and on which it has been receiving advice from experts.

She also recalled that the hydrocarbons law refers to this issue, noting that this is something which is seriously being considered and that final decisions will be taken along the way.

Asked about the environmental dangers deriving from this endeavor, Antoniadou recalled that prior to the exploration activity which started in Block 12, an environmental impact assessment was carried out on the basis of the criteria set out by the relevant Directive of the European Commission.

So all aspects concerning the protection of the environment were taken into consideration, she underlined, noting that the sensitivities of Cyprus with regard to the protection of the environment are high, she noted.

The Cyprus Energy Forum aims to provide the leading platform for policy makers, business, decision makers and investors to answer these questions, explore the challenges and potentials of natural gas and discuss the crucial ingredients that will enable the establishment of Cyprus as a leading energy supplier in Europe.