MONTREAL - Cyprus, which is becoming a
major exploiter of recently discovered gas
resources in the eastern Mediterranean, is to
build an US$8 billion gas liquefaction terminal
for export of natural gas found offshore, Minister
of Commerce, Industry and Tourism Neoclis
Sylikiotis told the Cyprus Natural Gas Conference
in Nicosia last week.
Representatives of
Deutsche Bank and Credit Agricole have expressed a
"preliminary interest" in investing in the
project, which would be completed towards the end
of this decade, said Sylikiotis, according to the
Cyprus Mail.
At issue is the fate of the
gas in Block 12 of Cyprus' offshore sector south
of the island in the East Mediterranean, the
so-called "Aphrodite" strike made by the US-based
Noble Energy late last year. Noble announced that
it had discovered between 180 and
285 billion cubic meters
(bcm) of natural gas. Cyprus will soon create a
state hydrocarbons corporation and appoint a
permanent team for the necessary industrial
negotiations with Noble Energy.
US-based
Noble Energy is the lead company and operator for
both the Cypriot and Israeli consortia that have
made separate strikes in the region. In December
2011, it announced that it has found probably
between 180 and 285 billion cubic meters (bcm) of
natural gas in Block 12 of Cyprus's exclusive
economic zone (EEZ) - the "Aphrodite" strike. This
is reportedly to be enough to supply the island's
domestic consumption for over two centuries.
Its other find, the "Leviathan" strike, is
in Israel's EEZ, about 40 kilometers from the
Aphrodite strike. The deposit is estimated to hold
over 450 bcm of gas, possibly with another 250 bcm
at a lower depth, plus 4.2 billion barrels of oil.
Cyprus and Israel are at present negotiating a
unitization agreement for developing the reserves
and sharing their product.
A unitization
agreement consolidates into a pool the
participating interests in the consortia, allowing
the development and operation of deposits divided
by an international boundary and consequently
distributed property rights to proceed in an
integrated and efficient manner on the basis of
the whole geophysical "unit" that it represents.
Sylikiotis said the proposed liquefaction
terminal would be located onshore. He separately
told the Associated Press that gas piped directly
from the offshore deposits (including perhaps from
the Leviathan strike) would also supply domestic
Cypriot power plants.
An Israeli
commission is deliberating over the extent of the
government's involvement in the fields adjoining
Aphrodite in Israel's own EEZ. It has made
preliminary recommendations that Israel retain at
least 400 bcm of its offshore natural gas for
domestic use, according to Jerusalem Post.
Not all of that need come from Leviathan,
given other gas fields in Israel's EEZ, most
notably the Tamar and Dalit fields, of which the
former alone (also operated by Noble Energy) is
estimated to contain between 275 and 300 bcm,
roughly half of which is already contractually
committed to Israeli entities.
Among other
possibilities for energy development, according to
Greek-language Cypriot newspaper Fileleftheros,
Sylikiotis supported laying a high-voltage
undersea electrical cable (less expensive than a
gas pipeline) from Cyprus to Greece, involving
also the participation of Israel, all three of
which countries would consume the electricity
produced.
For Israel, such a solution
would appear to be a more practical than
transferring the gas onshore to generate its own
electricity there. Israel has been exploring with
the South Korean firm Daewoo the possibility of
developing technology for a floating LNG terminal
for the Tamar deposit, in order to avoid "not in
my back yard" objections from residents near where
an onshore station would have to be built.
Sylikiotis's statement to Fileleftheros
leads to the conclusion that gas will not be
transshipped onward to Italian markets via the as
yet unbuilt Italy-Greece Interconnector (IGI)
pipeline, which was lost out in the competition to
be the western route for piping Caspian natural
gas from Azerbaijan's offshore Shah Deniz Two
field.
The IGI plan included the Poseidon
pipeline from Greece to Italy underneath the
Ionian Sea, where the Greek government has been
seeking, so far unsuccessfully, to elicit interest
in seabed exploration for offshore natural gas
deposits. The IGI option for the joint Aphrodite
and Leviathan strikes had been publicly
entertained until now.
Dr Robert M
Cutler (http://www.robertcutler.org),
educated at the Massachusetts Institute of
Technology and The University of Michigan, has
researched and taught at universities in the
United States, Canada, France, Switzerland, and
Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian
Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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