Cyprus Eyes Mideast Tensions But Still Optimistic on Natural Gas Prospects: Minister


Tensions flaring in the Middle East may create short-term problems for Cyprus' hydrocarbon plans, which include potentially becoming a natural gas supplier to Europe, the country's energy minister, George Lakkotrypis, said on Platts Energy Week, an all-energy news and talk show program.

While escalations in countries such as Syria "haven't had any bearing so far," they could effect "technical operations" such as seismic acquisitions and production tests, said Lakkotrypis.

In December 2011, Noble Energy announced it had discovered natural gas in block 12, located in Cyprus' Exclusive Economic Zone. Estimates at the time put the block's gas resources at 5-8 trillion cubic feet (Tcf). Production tests began this month, but Noble Energy recently ran into a technical glitch and is now making fixes.

Still, the event is of "historic significance" for the island nation since "it is the first time we have Cypriot natural gas on the surface of the sea," he said. Cyprus would like to start shipping its gas through an onshore liquefied natural gas (LNG) terminal by 2019-2020, said Lakkotrypis. France's Total and Italy's Eni are expected to add to the gas output with their drilling.

There's also a potential for an LNG partnership with Israel. "First and foremost Israel needs to decide how much gas they will export and also they need to decide which way they will try to export" such as building an onshore LNG plant or a floating terminal, said Lakkotrypis.

He said the resources can be used to help smooth over the country's relationship with Turkey, by using them as "a source of stability and economic development for everyone."

"The discovery of large natural gas reserves in the eastern Mediterranean opens up a whole new prospect of possibilities," said Lakkotrypis. The country has substantial offshore acreage in the Levant Basin, which holds an estimated 1.7 billion barrels of oil and 122 Tcf of natural gas.

The bigger plan for Cyprus is to create a sovereign fund like Norway has, said Lakkotrypis.

"What we admire about the Norwegians is how responsibly they managed this wealth that they discovered off their waters. Their sovereign wealth fund is one of the largest in the world," he said.

Cyprus is "hoping to put together a sovereign wealth fund that will manage revenues from hydrocarbons in a very similar way," said Lakkotrypis, citing needed funding for infrastructure, to pay down debt and "certainly leaving some money aside for future generations."

He also lauded Norway's "knowledge-based" oil and gas economy, which exports not only natural resources, but also lawyers and consultants who specialize in oil and gas, as well as others.

Cyprus has "a story to tell as a country, a new story to tell, a good story, despite the economic travails that we have been facing and still are," said Lakkotrypis.

Other Program Highlights

Also addressed on Sunday’s program was the controversial nominee for chairman of the U.S. Federal Energy Regulatory Commission (FERC) – Ron Binz. Nora Mead Brownell, of ESPY Energy Solutions, and Myron Ebell, of the Competitive Enterprise Institute, joined Senior Correspondent Chris Newkumet to examine the new FERC head nominee.

Richard Faulk, senior director of the initiative for energy and environment at George Mason University School of Law, also joined the program to preview energy and environmental issues to be addressed by the U.S. Supreme Court when it opens its new term this October.

During Sunday’s “Market Spotlight” segment, Platts Petrochemical Editor Maria Tsay explained how the recovering European economy is supporting growth in the petrochemicals markets.

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Source from : Platts