Cyprus to start natgas talks with ENI-KOGAS for 2 new blocks
Cyprus is entering into negotiations with the Italian-Korean consortium ENI-KOGAS on the licensing of two new blocks, 5 and 6, west of the island’s offshore Exclusive Economic Zone (EEZ) for natural gas exploration.
The government decided on Thursday to begin talks by December 2. Energy Minister Yiorgos Lakkotrypis was authorised by the cabinet to extend the process if it is not concluded by the deadline. He is expected to send a letter to the consortium within the day inviting them to enter into talks.
This will conclude the second licensing round, with the government not yet saying if it will proceed with a third round.
Texas-based Noble Energy secured the first license in 2007 for block 12, south east of the island’s shores, having drilled several exploration wells, that have indicated potential reserves of an average 5 trillion cubic feet of high grade natural gas. Noble has since partnered with Israel’s Delek Drilling and Avner Oil companies and they have also jointly signed an MoU for the design and eventual construction of a liquefied natural gas plant (LNG) onshore for processing and re-export.
ENI-Kogas clinched three offshore natgas blocks (2, 3 and 9) in the second licensing round, while French Total secured the rights to block 10 and 11. ENI-Kogas and Total have pledged to start their own exploration drilling within these offshore gasfields in the third quarter of 2014 and the first quarter of 2015, respectively.
By awarding its two westernmost licenses, Cyprus may be opening a Pandora’s box with rival Turkey that has threatened with military action in the eastern Mediterranean, putting its own claim on Cyprus gasfields, based on the argument that the Turkish Cypriot community in the northern occupied territories should have an equal share of oil and gas revenues.
The Greek Cypriot government has argued that Turkish Cypriots, financially maintained by Ankara and with the presence of a 40,000-strong battalion, should have access to funds from hydrocarbon sales only after a solution that will reunite the island and rid it of Turkey’s occupation troops.
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