The Cyprus government has approved an initial deal with U.S. and Israeli companies to build and operate a natural gas liquefaction by the end of this decade.
The Cabinet approved a memorandum of understanding (MoU) with Noble Energy International Ltd, Delek Drilling Limited Partnership and Avner Oil Exploration Limited Partnership to build the LNG plant near the Vassiliko energy hub on the island’s southern coast that will process the output from offshore gasfields within the Cyprus exclusive economic zone (EEZ), as well as from neighbouring Israeli and even Lebanese gasfields for export.
Noble is currently conducting a second appraisal well within the ‘Aphrodite’ Block 12 on the south easternmost tip of the Cyprus EEZ, adjacent to the Israeli EEZ where Noble, Delek and Avner are already in the process of exporting natural gas output from the Leviathan field. The U.S.-based exploration and energy exporter hopes to have a concrete estimate of the size and value of Block 12 by early 2014. Initial estimate suggest that the block may contain an average of 7 trillion cubic feet of natural gas.
Energy, Trade and Tourism Minister Yiorgos Lakkotrypis said that the agreement for the LNG plant will be signed by the end of this month.
“The inclusion of Cyprus in EU energy planning renders the energy sector the key to achieving our goals for financial recovery, growth and the creation of new jobs,” Lakkotrypis told delegates at the 52nd General Meeting of the Institute of Certified Public Accountants of Cyprus (ICPAC).
He said that with the appraisal well in block 12 already underway, procedures will be launched to sell the LNG with 10- to 12-year agreements, and that this was not the presale of natural gas but common practice in the hydrocarbon industry, which would secure funds for the liquefaction terminal.
Lakkotrypis said the first quantities of natural gas from block 12 are expected in Cyprus for electricity production in 2018, while by early 2020 Cyprus will be in a position to export its own natural gas to markets in Asia and Europe.
Other exploration licenses have been granted to France’s Total, and the Italian-Korean joint venture ENI-Kogas.
ISRAEL TO EXPORT 40% OF NATURAL GAS
Meanwhile, Foreign Minister Ioannis Kasoulides said that Israel has taken the first step as regards its natural gas exports and now Cyprus awaits to see how these exports will be achieved.
Commenting on Israel’s decision to export 40% of its output from offshore wells, keeping a larger amount for local use than expected Kasoulides said that one way is the export via a liquefaction terminal and what Cyprus is now waiting for is for Israel to decide whether it will set up a terminal at home or it will use the terminal in Vasiliko area.
Kasoulides also commented on Israel’s search and rescue exercise within Cyprus airspace and that it was not related to exploration and security issues within the Cyprus EEZ.
He explained that the exercise was part of defence cooperation agreement Cyprus has with many countries, including Israel, pointing out that the defence cooperation does not in any way mean an alliance, probably to calm concerns within neighbouring Lebanon that Cyprus was downgrading its relationship in favour of closer ties with Israel.
