Investor interest for LNG plant; EU to give €10 mln for domestic gas network
Cyprus will establish a national oil and gas company “in the next few days”, said president Demetris Christofias, speaking at the Gulf Intelligence Levant Energy Forum 2012 at the University of Cyprus on Tuesday.
“We are at a critical juncture with regard to energy. We have a clear picture of the parameters. We know where we want to go and we are proceeding cautiously, consistently and in a structured manner,” he said.
US-based Noble Energy announced in late 2011 that it had found an estimated 5 to 8 trln cubic feet (tcf) of natural gas with a gross mean of 7 tcf in Block 12 of Cyprus’ Exclusive Economic Zone (EEZ).
Just this find is enough to supply domestic consumption for well over 100 years. A second licensing around was launched in May and attracted 15 bidders from 14 countries.
Following large gas finds by Israel in late 2010, the Eastern Mediterranean is of growing interest for natural gas.
Emphasising Cyprus’ potential role as an energy bridge in this region, the president said that he has spoken personally with the new Egyptian president.
“We have agreed that we will maintain our very good relationship and deepen it further,” he said. Cyprus signed an Exclusive Economic Agreement with Egypt in 2003.
The Minister of Energy and Water Resources of Lebanon, Gebran Bassil, also spoke at the conference, and said that Lebanon planned to launch its first licensing round soon.
Interest in LNG plant
Meanwhile, the government is receiving a lot of interest from potential investors to help build a liquefied natural gas (LNG) terminal, according to the Minister of Commerce, Industry and Tourism, Neoclis Sylikiotis. In June the government took the decision to build an LNG plant for export.
Sylikiotis said that the LNG plant would be constructed on the basis of a joint venture with the national oil and gas company.
“There is a lot of interest from investment institutions and from buyers who are interested in investing in the terminal,” said the minister, who has just returned from a mission to China to explore investor potential.
Sylikiotis explained that the government would be a partner in the joint venture because the LNG terminal would be “a strategic asset”.
He emphasised that they were open to cooperation with other supplier countries in producing LNG.
Israel has been widely tipped as a potential cooperation partner. The Israeli government is shortly due to take a decision on how to export its gas reserves.
EU to give EUR 10 mln for domestic gas network
Sylikiotis said that the government will start discussions with Noble next week to work out how best to bring natural gas onshore and that the government was considering interim options for gas supply.
He added that the government intended to create a domestic natural gas supply network and that the EU had pledged EUR 10 mln for this purpose. Natural gas would first be used to fuel the power plants and then industrial users.
On November 9, in its capacity as EU rotating president, Cyprus will host a regional conference on the safety of offshore activities. EU member states as well as neighbours will be invited.
The minister did not say if Turkey had been invited but Ankara has said it will have no dealings with the European Council during the Cyprus presidency.
Does Cyprus have the talent to exploit natural gas?
A new player in the gas market needs four key skills before it can successfully exploit natural gas, according to Adam Lomas, Senior Director of Leadership & Talent Development at Norman Broadbent Middle East, speaking at the Gulf Intelligence Levant Forum on Tuesday.
*Experts to negotiate on behalf of the government. Lomas, who has negotiated for international oil companies (OICs) in Brunei, Oman and Nigeria said that OICs always prefer to do business with those who are technically at the same level and that “this leads to a win-win situation”. If this expertise is currently not available or because there are other priorities in the country, it may be sensible to look for external expertise. This is something needed in the next 6 months, he says.
*Skills in strategic planning. Lomas noted that the UK government gets as much revenue from transporting hydrocarbons today as it does from producing them. “This took far sighted strategic planning, he said. “In the short term, how can we find, attract and keep expatriate talent to the island to carry out this vital task?” he asks. Iraq provides a great opportunity for pipelines, he says, as its gas was supposed to go via Syria.
*Skilled manual labour (longer term). Lomas said that there is already a “desperate shortage” of such skills in the oil industry, there are many countries vying for these skills and finding and keeping these skills will take time and excellent project management to source them. There are also the skills required to build the service industries.
*Skilled Cypriots. Non-Cypriots today account for 30% of the labour force. With a nod to the Gulf countries in which they account for 80%, Lomas notes the need “to build an educational system which will produce the petroleum engineers, marine experts, managers for the future”. Lomas noted that Cypriots need to benefit but in the meantime Cyprus could draw on the many retirees from oil majors in Cyprus today.
