Negotiations for LNG terminal enter substantive phase, Cyprus Energy Minister says

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Negotiations between Cyprus and Noble-Delek for the liquefaction terminal of natural gas, to be built at Vasilikos on the southern coast, are entering a substantive phase Minister of Energy, Commerce, Industry and Tourism George Lakkotrypis told CNA today.

Lakkotrypis said that negotiations on the LNG terminal have been underway for about a month and now they have entered “deep waters” and “substantive” phase, noting that they concern the structure and the share capital of the terminal.

The Minister said negotiations should be completed by December 2013, when a final agreement is expected to be reached, based on the Memorandum of Understanding signed in late June between Cyprus and three companies Noble, Delek and Avner.

Asked about the appraisal drilling in Cyprus` Block 12 by Houston based Noble, Lakkotrypis said the key stage of the drilling has been completed, adding that the drilling has reached a depth of more than 5,600 meters below sea level.

He also noted that the evaluation process regarding the geological data obtained from appraisal drilling has already begun and will last a few weeks.

Asked if there are any early indications as regards the results of the drilling, he said that evaluation process must be completed first before final results are announced.

Asked whether a second appraisal drilling would be necessary, he said that it will become clear in due time.

On the interim solution for the supply of natural gas to Cyprus, he said that a final decision on the interim gas solution is expected to be announced in two weeks at the latest.

Asked to comment on tomorrow`s arrival in Cyprus of Energy Ministers of Israel and Greece, he said that a Memorandum of Understanding between the three countries will be signed during the visit of the two Ministers here.

He said the MoU will constitute the "the framework of a tripartite dialogue on energy issues and water resources with specific suggestions for actions such as the protection of the environment and the management and development of water resources."

In 2011 Noble announced that exploratory drilling in block 12`s A-1 well revealed an estimated resource of 5 trillion cubic feet (tcf) to 8 tcf, with a mean of 7 tcf.

Noble Energy operates Block 12 with a 70 percent working interest. Delek Drilling Limited Partnership and Avner Oil Exploration Limited Partnership each own 15 percent.

Apart from Noble Energy, Cyprus has also signed contracts with the ENI/KOGAS consortium for hydrocarbons exploration in blocks 2, 3 and 9, as well as with French TOTAL for blocks 10 and 11 in its Exclusive Economic Zone.

On June 26, Cyprus government, Delek and Avner signed a Memorandum of Understanding (MoU) or the Cyprus LNG terminal .