US giant ExxonMobil and Qatar Energy Friday signed an exploration and production-sharing contract for oil and gas in Cyprus’ Exclusive Economic Zone (EEZ) despite Turkey’s opposition to the deal.
The contract was signed by Cypriot Energy Minister Natasa Pilides and Varnavas Theodosiou, CEO of ExxonMobil Cyprus and Ali al Mana, Director of Qatar Energy’s International Upstream and Exploration.
It is the second Cyprus exploration contract the consortium has signed and the tenth licenced block of 13 in the Cypriot EEZ.
In February 2019, the consortium discovered a huge natural gas reserve off the coast of Cyprus in block 10, the island’s largest find to date, holding an estimated five to eight trillion cubic feet.
Block 10 is 2,572 square kilometres, with ExxonMobil holding 60% interest with Qatar Energy owning 40%.
The consortium plans on drilling an appraisal well on Block 10 in late December, with results expected by the end of February.
Cyprus’ oil and gas drilling was interrupted by the covid-19 pandemic.
“Despite the increasingly difficult working environment for the global oil and gas industry, today we are taking a decisive step towards enhancing our mutually beneficial partnership in Cyprus’ EEZ,” Pilides said at Friday’s signing ceremony in Nicosia.
Theodosiou said: “This development in addition to our exploration activities in neighbouring block 10…enable us to expand our presence in Cyprus in what we believe to be a promising region for offshore exploration.”
Asked about Turkey’s negative reaction to the licensing of block 5, a part of which Ankara to be in its continental shelf, Pilides said the consortium had made a significant investment.
“We proceed based on international law and the Law of the Sea; this has always been our principle,” said Pilides
She said for block 5, the consortium’s priority is acquiring seismic data, and the fieldwork will begin in the second half of 2022.
Turkey threatens to prevent ExxonMobil’s search for oil and gas off Cyprus after Nicosia awarded it the rights to block 5.
Last week, the Turkish Foreign Affairs Ministry claimed that a part of the licensed area in question violates Turkey’s continental shelf in the eastern Mediterranean.
“Turkey will never allow any foreign country, company or ship to engage in hydrocarbon exploration activities in its maritime jurisdictions,” the Turkish Foreign Ministry said.
It added that Turkey “will continue to defend” its rights and those of the ‘Turkish Republic of Northern Cyprus’.
The self-proclaimed ‘Turkish Republic of Northern Cyprus’, recognised only by Ankara, lays claim to any energy resources discovered off its coast, claiming the island’s natural resources belong to both communities.
The eastern Mediterranean has become an energy hot spot with big natural gas finds for Cyprus, Israel, and Egypt.
Turkey’s push to secure a share of the resources has heightened tension in the region.
Ankara was accused of “gunboat diplomacy”, when in February 2018, the Turkish navy prevented an ENI-leased drillship from reaching its drilling target in Cyprus’ Block 3.
The European Commissioned has urged Turkey to sustain de-escalation in the region while vowing to defend the interests of member states Greece and Cyprus if it didn’t.
Cyprus’ foreign minister issued a statement last week criticising “Turkey’s utter disregard for conventional and customary International Law”.
“The exploration and/or exploitation of Block 5 is an exclusive sovereign right of Cyprus and does not affect the rights of any third state, including Turkey,” it added.
The discovery of nearby Egypt’s huge Zohr offshore reservoir in 2015 has stoked interest that Cypriot waters hold the same riches.
Cyprus has pushed ahead with exploring offshore energy resources despite the collapse in 2017 of UN talks to end the country’s decades-long division.
Turkey was widely condemned for sending drillships into Cyprus waters for energy exploration; the EU has also sanctioned Ankara for doing so.
In the first half of 2022, Italy’s ENI and France’s Total are expected to drill in their licensed blocks.