Energy Minister Giorgos Lakkotrypis unveiled Thursday a road map for the exploitation of Cyprus’ natural gas reserves.
Speaking during a press conference, in Nicosia, the Minister said the road map starts with the appraisal well in Cyprus’ exclusive economic zone block 12 and ends with natural gas exports, by the end of 2019.
In 2008, Cyprus signed its first hydrocarbon exploration contract with US Noble Energy for offshore block 12. Exploratory drilling conducted by Noble in late 2011 revealed an estimated gross mean resources of 7 trillion cubic feet.
Lakkotrypis said Noble’s appraisal process will conclude in the third quarter of 2014. The appraisal well “A-2” in the “Aphrodite” reservoir starts Friday, with the drilling scheduled to reach a depth of 5,607 meters. After that, a third party certification of the reserves will follow.
The Minister added that discussions are already taking place between the government and Noble for a memorandum of understanding, to set the negotiation framework for the construction of a natural gas liquefaction plant, in the Vassiliko area, in southeastern Cyprus. Negotiations are expected to conclude during the fourth quarter of 2013, with the signing of a project agreement that will delineate the commercial, financial and legal structure of the LNG terminal.
Following the appraisal process’ conclusion, procedures to reach long-term sales agreements or “heads of agreements” will start. The Minister said that such agreements extend to 10, 15 or 20 years, depending on demand.
The final investment decision on the construction of the LNG plant will be taken in the third quarter of 2015, taking into account a combination of financing options, such as loans, private investors, and creditors. EU financing will be sought as well.
According to the Minister, the first quantities of natural gas will reach the shore in the third quarter of 2018 and will be used for domestic electricity production. By the end of 2019 or early 2020, Cyprus will be in position to export its own natural gas from block 12, Lakkortypis said.
Speaking about other licensed blocks in the EEZ, the Energy Minister said more exploratory drillings will follow within 2014.
Apart from Noble, Cyprus signed contracts with the ENI/KOGAS consortium for hydrocarbons exploration in blocks 2, 3 and 9 and with French TOTAL for blocks 10 and 11.
Speaking on his Ministry’s priorities, Lakkortypis said they included a study undertaken by a Norwegian consulting firm, on Cyprus’ institutional and organizational framework in the energy sector, and its implementation afterwards.
Moreover, he said that the Ministry aims at strengthening the Energy Service, the ministerial department that deals with energy matters, seek for legal advisors that will assist in negotiations for a memorandum of understanding with Noble and find the necessary financial advisors for the LNG terminal master plan.
