Giant Egyptian gas field may extend into Cyprus waters

Greek Cypriot administration investigating if massive gas find in Egyptian waters extends to island’s exclusive economic zone

Photo by: Reuters
Photo by: Reuters

Greek Cypriot Energy Minister Yiorgos Lakkotrypis has said that his administration is investigating if a newfound offshore gas field in the eastern Mediterranean Sea extends into the island’s waters.

Speaking on Tuesday, the Greek Cypriot official said whether the giant Zohr gas field recently discovered in the Egyptian Nile Delta extends into Block 11 of the island’s exclusive economic zone (EEZ) will be determined in the “coming days” as researchers study geological evidence.

"Two things must extend to our EEZ to have a shared field, the geological structure of the seabed and the gas field as such," Lakkotrypis said, adding that the find was encouraging to exploration efforts in the island’s continental shelf.

Block 11, located just six kilometres from the Zohr field, is currently being leased by French energy firm Total.

The discovery of the 100 square kilometre Zohr gas field in the Shorouk Block by Italian energy firm Eni was declared late in August. It is the largest known gas field in the Mediterranean to date, holding an estimated 30 trillion cubic feet of gas.

Eni signed an energy exploration deal with Egypt worth $2 billion last June, allowing the Italian giant to explore in Sinai, the Gulf of Suez, the Mediterranean and areas in the Nile Delta.

Egypt, which was traditionally an exporter of natural gas, has been experiencing an energy crisis since 2011 due to increasing consumption and declining production, and has thus turned into a net importer.

In a bid to revive the country’s gas production, Egypt under President Abdel-Fattah el Sisi secured  $36.2 billion in investment deals, after a three-day conference held in the Red Sea resort town of Sharm el Sheikh in March.

During the conference, Eni signed an agreement worth $5 billion over 4-5 years for concessions in the Mediterranean, the Western Desert, the Nile Delta and Sinai. The deals also include a record investment by British Petroleum and its Russian partner DEA of $12 billion in Egyptian gas fields that will produce 3 billion barrels of oil.

The conference, which started with three Arab states pledging $12 billion in investments and aid, was seen as an endorsement of President Sisi, a former army general, who came to power after overthrowing his predecessor, democratically elected president Mohamed Morsi, in a military coup in 2013.

Deals at risk

In February, Egypt’s Egyptian Gas Holding Company (EGAS) and the Greek Cypriot administration’s Cyprus CHC Company signed a Memorandum of Understanding to increase energy cooperation which would see the technical details of an undersea pipeline explored to supply Egypt with gas imports.

An estimated 3.6 trillion to 6 trillion cubic feet of gas is expected to be transported from a field off the Greek Cypriot-controlled southern Cyprus coast after an agreement was reached in a meeting between Lakkotrypis and his Egyptian counterpart Sherif Ismail in Cairo.

Lakkotrypis previously said that the Greek Cypriot administration aims to supply Egypt with gas by early 2018 as part of a plan to connect the offshore 4.54 trillion cubic feet-capacity Aphrodite gas field, which is being administered by Texas-based firm Noble Energy, to the BG Group-operated network in Egypt’s Idku or Damietta.

The Aphrodite offshore gas field was discovered late 2011 with some estimates predicting a capacity of 9 trillion cubic feet before this figure was later revised down to 4.54 trillion cubic feet. The majority of the reservoir is located in Block 12 of Cyprus’s exclusive economic zone (EEZ), with a portion of it inside the Israeli EEZ.

Israeli gas firm Delek recently increased its share in the Aphrodite gas field from 19.9 percent to 49.9 percent, after purchasing 30 percent from the field’s co-operator, the Texas-based Noble Energy, for $155 million.

Noble and Delek also operate the offshore Leviathan gas reservoir in the Israeli EEZ, one of the largest offshore gas reservoirs discovered in the last 10 years with 22 trillion cubic feet in reserves. The Leviathan is also expected to provide Egypt with liquefied natural gas (LNG).

However, the massive find in the Zohr offshore gas field has raised concerns over previously agreed import deals, with Egypt becoming increasingly self-sufficient as more and more gas reserves are discovered.

Dismissing such concerns, Egyptian Petroleum Minister Sherif Ismail told Reuters in an interview in early September that the new find will not damage the previous deals, saying “any negotiations between private companies in Egypt and in the eastern Mediterranean, and by this I mean Israel and Cyprus, will not stop.”

“We do not object to the plans of private companies [which are] operating in Egypt and looking to import natural gas from eastern Mediterranean countries,” Ismail added.

European market

The discovery of the reserves in the region have also raised hopes in Europe of an alternative gas source, as the continent continues its efforts to diversify its supply away from Russian gas.

Greek Cypriot Energy Minister Giorgos Lakkotrypis told the Turkish daily Milliyet newspaper in a report published in May that natural gas could go to the European market through Turkey, if there is a solution to the island’s 41-year dispute with the Turkish Cypriots.

Experts have also suggested combining the reserves in the region to economically justify the construction of an LNG plant, which would export LNG to the European market.

After a meeting with Greek Cypriot leader Nicos Anastasiades last week, Eni CEO Claudio Descalzi suggested that gas from reserves off Cyprus could be processed at the company facility in Egypt’s Damietta to export it to Europe.

In April, Eni and South Korean energy firm withdrew an exploration vessel from the island’s Block 9 after research yielded disappointing results in the block’s Onasagoras and Amathousa fields.

Speaking to reporters after his meeting with the Greek Cypriot leader, however, Eni chief Descalzi said, “we are reassessing our geological model but is clear that our commitment to continue exploration in Cyprus is very strong.”

TRTWorld and agencies