Cyprus can become a gas storage hub for the EU

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The energy sector in Cyprus, in relation to both domestic and global developments, is at a critical juncture, Under Secretary to the President Titos Christofides said in a speech on behalf of President Demetris Christofias at the Energy Gas Storage Summit 2012 in Prague.

Christofides noted that the strategic position of Cyprus in the Mediterranean Sea, in conjunction with the recent gas discoveries in the region and plans for their export, could promote the island as an alternative and fully flexible gas (LNG) storage hub for the European Union and the rest of the world.

According to Christofides, the recent discovery of substantial quantities of natural gas within the Exclusive Economic Zone of Cyprus, in combination with the potential utilization of other gas deposits and future gas findings in the area, opens up new prospects and gives a large new impetus to the role of Cyprus in the global energy map and the European energy market.

The total amounts of natural gas reserves of the Eastern Mediterranean basin, estimated at 120-150 trillion cubic feet, comprise a significant reserve which could satisfy the energy demand of the EU for a long time, he pointed out, noting that Cyprus reserves are situated at only 500 Kilometers away from the southern part of continental Europe.

Christofides said that the Republic of Cyprus is now entering the economic and technological fields of energy resources exploration for the very first time in its history. As a consequence, it needs to create all necessary institutional, legal, operational, technological, and construction facilities from scratch, based only on its existing, efficient and tested institutions which have contributed to the successful economic growth of our country during the last few decades, he added.

Cyprus, he continued, is also dependent on the experiences and models of management of natural energy resources, of countries such as Norway, Holland as well as others. The delimitation of the Exclusive Economic Zone of the Republic of Cyprus by itself also encompasses an act of self-fortification and self reassurance of our non- negotiable sovereign rights, he noted.

As he said the announcement made by Noble Energy International in December 2011 regarding the discovery of significant reserves of natural gas in block 12 (also known as the Aphrodite block), in the Exclusive Economic Zone of the Republic of Cyprus, of some 5-8 trillion cubic feet, has placed Cyprus on the energy resources map of the world.

''Based on this discovery, we have proceeded in opening a second round of licensing for the remaining twelve out of thirteen available blocks. The deadline for the proclamation of interest regarding this second round of licensing procedure, expired on the eleventh of May, a date within the ninety days period, specified by the relevant directives of the European Union. The interest shown by medium to large enterprises was, by all accounts, beyond our expectations,'' he noted.

He added that in the context of the development of indigenous natural gas deposits, the possibility of installing a sub-sea pipeline for the transportation of natural gas in Cyprus, so that it can then be distributed for domestic use, is of utmost importance and is currently under examination.

''Additionally, we are currently evaluating the potential establishment of the necessary infrastructure for liquefying the natural gas for export. A gas liquefaction plant in Cyprus can constitute the necessary regional energy infrastructure that may contribute to the diversification of supply sources and the security of energy supply, since it could serve as a flexible hub/interface for the large quantities of natural gas located in the greater Eastern Mediterranean Sea also known as the Levantine basin,'' he said.

Recently fifteen bids from five companies and 10 from joint ventures were submitted for the second licensing round concerning the Republic of Cyprus’ offshore hydrocarbon reserves.

Bids were submitted for 9 of the 12 offshore blocks, comprising the Cypriot Exclusive Economic Zone (EEZ).

Cyprus has signed an agreement to delineate the Exclusive Economic Zone with Egypt and Israel with a view to exploit any possible natural gas and oil reserves in its EEZ. A similar agreement has been signed with Lebanon but the Lebanese Parliament has not yet ratified it.

The first licensing round, concluded in 2007, resulted in granting concessions to Houston-based “Noble Energy” for exploratory drilling in Cyprus’ EEZ block 12. Noble started drilling in September 2011.

The government approved on November 23, 2011 the launch of a second licensing round for the remaining 12 offshore blocks.