Eni-Kogas extends gas exploration rights off Cyprus

Joint Italian-South Korean energy consortium to continue searching for gas off island of Cyprus till February 2018

Photo by: AFP
Photo by: AFP

The Greek Cypriot administration of southern Cyprus has agreed to extend a license allowing joint Italian-South Korean energy consortium Eni-Kogas to search of hydrocarbons off the eastern Mediterranean island’s coast.

Eni-Kogas had originally began exploring in block 9 of the island’s Exclusive Economic Zone (EEZ) in October 2014, but suspended its search in April this year after failing to find enough gas in the block’s Amathusa and Onasagoras reservoirs to justify exploitation.

At the time, Greek Cypriot Energy Minister Yiorgos Lakkotrypis told parliamentary representatives that the consortium had asked for a two-year delay to examine its data.

The commencing of exploration in block 9 briefly led to the suspension of peace talks between Turkish Cypriots and Greek Cypriots after Turkey sent a seismic vessel to the region in protest against the drilling.

Turkey has demanded the Greek Cypriot side halt unilateral exploration for reserves off the island’s shores before a peace deal is agreed with Turkish Cypriots to end over four decades of division between the two communities.

Cyprus was divided in July 1974 when Turkey conducted a military intervention on the island to secure the island’s north as a safe haven for the Turkish Cypriot community in response to a coup carried out by the Greek junta.

Turkey has since then maintained a military presence in the island’s breakaway north, which declared independence as the Turkish Republic of Northern Cyprus in 1983.

According to the Treaty of Guarantee - which was signed shortly after Cyprus became independent from the British Empire in 1960 - Turkey, Greece and the UK are responsible for ensuring and restoring peace in Cyprus.

The standoff continued for seven months, but was ended following the withdrawal of the Eni-Kogas drillship in April, which was quickly followed by the withdrawal of the Turkish ship, thus allowing peace talks to resume.

On Monday, Lakkotrypis told reporters following a cabinet meeting that the consortium had been granted an extension to February 2018 to continue its search, with drilling expected to resume in 2017 following the a review of current findings.

The consortium had asked for more time to “re-assess the energy potential,” adding that Eni was also assessing developments in light of its discovery of the nearby mega 30 trillion cubic feet-capacity Zohr gas reservoir located in Egypt’s EEZ.

Eni-Kogas have also been granted drilling rights in blocks 2 and 3. Additionally, Eni signed an energy exploration deal with Egypt worth $2 billion in June 2014, allowing the Italian giant to explore in Sinai, the Gulf of Suez, the Mediterranean and areas in the Nile Delta.

It was originally hoped the Zohr gas field extended to Cyprus’ EEZ, but seismic research found a distance of six kilometres between Zohr and block 11.

Nonetheless, officials have been exploring the possibility of combining reserves found in the region for export to Europe, which is looking to diversify its gas supply away from Russia amid tensions with Moscow over Ukraine.

“I hope and I expect that within January we shall have the first results from this re-evaluation,” Lakkotrypis said.

Earlier this month, French energy firm Total also extended its exploration rights by two years, despite thus far struggling to find drilling targets in its designated blocks 10 and 11.

So far, only 4.54 trillion cubic feet of natural gas has been found offshore Cyprus by Texas-based energy giant Noble in Block 12’s Aphrodite field - well below some original predictions of up to 9 trillion cubic feet of reserves.

Plans for a possible Liquefied Natural Gas (LNG) plant have been put on hold as the amount of gas found so far does not economically justify its construction.

TRTWorld and agencies