Cyprus is ready to extend the exploration contracts of the Italian French Eni-Total consortium after the energy giants postponed drilling off the island due to the impact of the coronavirus pandemic.
This is the view of Andreas Kyprianou, chairman of the Parliamentary Energy Committee.
Energy Minister George Lakkotrypis briefed the committee on the latest developments in Cyprus’ hydrocarbon exploration programme amid the coronavirus crisis.
Total of France and Eni of Italy have followed ExxonMobil and suspended their planned drilling activities in Cyprus’s exclusive economic zone due to concerns about the impact of coronavirus.
The consortium sent a letter to Cypriot authorities last week announcing their decision.
Nicosia was told the consortium is postponing – not abandoning – its planned activities in Cyprus’ EEZ until next year.
Eni and Total had been scheduled to start drilling in Block 6 and two other blocks as it is the biggest player in the government’s energy search.
US energy giant ExxonMobil postponed its planned activities in Block 10 until September 2021.
Kyprianou noted, however, that Nicosia does not plan to review the contracts of ExxonMobil/Qatar Petroleum.
He told CNA that ExxonMobil/Qatar Petroleum had two appraisal wells scheduled for September but notified that these activities will be delayed for a year later.
The government views as positive that the oil and gas majors will still allocate capital expenditure for the drills at a later date.
Eni-Total planned to carry out three exploratory drills, starting from April 2020, they have been put back until April 2021 the earliest.
Kyprianou said ExxonMobil’s contract will not be revised as it concerns appraisal wells only but Eni-Total’s contract with the government may be adjusted.
“We do not want to cause additional problems to the companies in the current period, therefore it is expected that Eni-Total’s contract will be extended,” the Committee chairman said.
He said the position of the government on Turkey’s provocations in Cyprus waters “which is shared by international actors, is that these actions are more political rather than substantial”.
The coronavirus pandemic triggered a sudden global economic downturn and plummeting global oil prices.
A collapse in prices has been compounded by the oil price war between the world’s two biggest producers, Saudi Arabia and Russia after the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries’ failed to reach an agreement in March to curb oil production.
This combination of the pandemic and oil glut has affected exploration and drilling activities of energy majors and resulted in the revision or temporary suspensions of explorations, especially in the Eastern Mediterranean.
It has also made the exploration of Cyprus gas a much costlier and risky enterprise than it was before the COVID-19 crisis.