Cyprus Gas Find Worth Tens of Billions

Cyprus has approximately $129 billion (EUR 100 billion) worth of natural gas that will satisfy its electricity production needs for 210 years, said Commerce Minister Praxoulla Antoniadou.

Antoniadou was speaking only hours after President Demetris Christofias officially announced that Noble Energy had discovered between 5 trillion and 8 trillion cubic feet (tcf) of natural gas in the Block 12 Aphrodite field.

Christofias called the find “historic”, while Noble said it was “excited” about the “significant” find.

Speaking to the state broadcaster CyBC later Wednesday night, Antoniadou highlighted that the most important aspect of Noble’s findings was that “there is now certainty on the existence of natural gas in Cyprus, because until now we spoke about possibilities”.

Investors had shown interest even before any confirmation of the existence of hydrocarbons in block 12 of Cyprus’ Exclusive Economic Zone (EEZ). But now that Noble has confirmed the existence of a natural gas reservoir of between 5 trillion and 8 trillion cubic feet (tcf) with a gross mean of 7tcf, this interest will manifest in much more concrete terms, with regard to infrastructure investments and the provision of additional services.

“Another important issue is the quantities confirmed… it’s a significant quantity,” she said, noting that every trillion cubic feet of natural gas covers Cyprus’ electricity production needs for 30 years, meaning 7tcf will keep Cyprus satisfied for 210 years.

Asked to quantify the results in terms of value, Antoniadou confirmed that “we’re talking about tens of billions”.

“If you want an indication, if you consider that 6,000 cubic feet is equal to one barrel of oil, then approximately 7 tcf is equivalent to one billion barrels, and to give an indicative value of these deposits based on the barrel analogy, the deposits in one of the 13 blocks are worth around EUR 100 billion ($129 billion) in value,” she said.

The minister highlighted that Noble has the right to carry out exploratory drilling in a second part of block 12, while Cyprus has a total of 13 blocks in its EEZ.

Asked when gas could reach the island the earliest, Antoniadou replied the gas could arrive in Cyprus in three to four years for domestic consumption.

If there are enough quantities for export, then this would require more years and long-term strategic planning.

She noted the government was being advised by a panel of experts and consultants on all aspects, including licencing for the remaining blocks and possible long-term export strategies.

The minister added that some sort of national company needed to be created to manage the existence of hydrocarbons in Cyprus’ EEZ, giving the state a “decisive role” in wealth management.

Antoniadou skirted a question on possible collaboration with Israel on gas export, instead highlighting the need for all countries of the region to work together to create prosperity in the region.

She also highlighted the strategic importance of the results for Europe’s energy needs, given the fact nuclear energy has fallen from grace.

“Cyprus is in a position to strengthen the energy security of the EU as we are the only country in the region that belongs to the EU, and at a time when the EU seeks new sources of natural gas,” she said.

Finance Minister Kikis Kazamias remained somewhat more reserved in his celebratory response.

“The times we are facing are not the easiest and even announcements like the one we’ve heard does not permit us to have our head in the clouds,” Kazamias said. “We need to remain grounded, serious and prove that we are prepared to manage this properly. Problems are not overcome on their own. We continue to live in a difficult economic environment, not so much domestically as internationally.”

Asked if he expects upgrades from the credit rating agencies following the announcement, he said: “I would hope so.”

Communications Minister Efthymios Flourentzos struck a note of optimism, saying that as a public listed company, Noble would always announce a more conservative estimate of the quantities of natural gas, so as not to run afoul of the New York Securities and Exchange Commission.

University of Cyprus professor and member of the group of experts appointed to advise the government, Panos Papanastasiou agreed, saying the find was “possibly the second largest offshore gas find in the last decade”.

“Companies are usually conservative. They don’t announce figures and then downgrade them because they run the risk of being penalized,”  Papanastasiou said.

Professor of Chemical and Biomolecular Engineering at the University of Houston, Michael Economides, said the total quantity of all deposits in Cyprus’ EEZ could reach 75 tcf.

Economides called on the government to set up a national petroleum company, which could then go 30 percent public, raising “at least” $10 billion for the state.

Energy Service head Solon Kassinis said Wednesday was “particularly moving” for him as he had estimated last year block 12 had between 8 and 10 tcf. He said announcements for a second round of licencing for the remaining blocks could be expected by the end of next month.

Goldman Sachs published a research report Wednesday stating that the Cyprus success may help fast-track EU-based liquefied natural gas development.

“We view this as significant because we believe there are fewer political hurdles for consumers to take gas from an EU country,” it said.

Opposition party DISY’s Haris Georgiades said the announcement was “without doubt a very significant and positive development”. He called on the government to formulate a comprehensive energy strategy, create a credible institutional framework and establish procedures of “full transparency”.

AKEL, DIKO, EDEK and the Greens also welcomed the “historic” findings.

Source: Cyprus Mail & Rigzone


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