The latest gas find off Cyprus is insufficient for Nicosia to join the EU’s energy plans to become less reliant on Russian supplies, as Moscow threatens to turn off the taps, says industry expert Charles Ellinas.
The Senior Fellow at the Global Energy Centre, Atlantic Council, admitted that recent findings had bolstered belief in the area’s potential, but Cyprus’ resources in natural gas are too small to make any difference for the EU.
He argues that the island is not in a position to exploit untapped reserves for the next six to seven years when it will be too late as the EU is on its way to cutting emissions by over half by 2030 to reaching carbon neutrality in 2050.
Earlier in the week, Energy Minister Natasa Pilides said a ‘significant’ new gas find off Cyprus would help the EU member state speed up commercial exploitation of its untapped resources and help supply Europe with secure energy.
She told CyBC state radio the discovery by Italian-French consortium Eni-TotalEnergies of 2.5 trillion cubic feet would help “create synergies and viable investments” in the island’s energy search.
The gas discovery was made at the Cronos-1 well, located 165 kilometres off the southwest coast of Cyprus.
It is within block 6 of Cyprus’ exclusive economic zone with “good to excellent quality characteristics”.
Eni drilled the exploration well in the same block where in 2018, it discovered the large Calypso-1 gas field that contains an estimated 4.5 trillion cubic feet of gas.
“With Cronos-1, Cyprus discovered gas is roughly about 400 billion cubic meters (bcm).
“The discovery is relatively small and, even though important in confirming the gas potential around block 6, it does not make these numbers much more viable,” said Ellinas.
He noted that not much could be said beyond that because it is a small deposit of 2.5 trillion cubic feet of natural gas, not comparable to Egypt’s 30 or Israel’s 20.
“But in total, together with the discoveries at Glafcos and Aphrodite, it increases quantities to about 13 trillion cubic feet.
“They are in different places and more difficult to exploit at this stage.”
Ellinas explained the EU needs new natural gas resources coming online this decade during a transitional stage on its path to a green economy.
“The EU’s goal is to reduce gas consumption in general in line with its target to cut emissions 55% by 2030 and achieve net-zero by 2050.
“This is also stated clearly in the EU-Egypt-Israel MoU, valid only up to 2030 and not beyond.”
This would be a turn-off for investors to inject investments into developing Cyprus gas merely for European markets.
Ellinas argued that because Cyprus will probably not be able to cater to the bloc’s natural gas needs, it does not mean those resources go to waste.
Turkey threats
“For Cyprus, the markets are in Asia where gas demand is growing.
“But that requires the geopolitical risks posed by Turkey’s threats to be removed.”
In other words, removing Turkey’s threat from the equation would require solving the Cyprus problem.
“As long as this risk remains, it deters investors from committing the multi-billion dollars needed to build the required facilities”.
Ellinas said that without a change of policy by the EU and a solution to the Cyprus problem, Cypriots have little option but to wait longer to be able to exploit natural gas reserves.
“I believe these problems will be overcome, one way or another, before the end of the decade, making export of Cyprus gas possible to Asian markets.”
Whether Cyprus could cater to its own needs, Ellinas said this is not viable.
“Our needs are too small, about 1 bcm/yr. Developing the gas just for this is not viable. It makes sense only when combined with a gas export project”.
He argued that the state has neither the know-how nor the money to invest because more than a billion euros is needed to do such a project.
Ellinas said that if this were possible, Cyprus would have enough energy, “costing next to nothing”, to cover its heating needs for the next 70 years.
