AN INITIAL round of negotiations with the companies that were awarded offshore gas exploration licences wrapped up yesterday, amid fresh reports over the selection of a French-Russian consortium for the Block 9 prospect.

At the Commerce Ministry,a government-appointed negotiating team held talks with representatives of the TOTAL-NOVATEC consortium that was selected for the Block 9 concession, followed by a meeting with Total E&P Activities Petrolieres that was picked for the Block 11 licence.

On Monday, negotiations were held with officials of the ENI-KOGAS consortium selected for the licences for blocks 2 and 3.

Sources told the Cyprus Mail that full-blown negotiations would get underway in about a fortnight; yesterday the selected companies were asked to come back in two weeks’ time with improved proposals, regarding both the financial and technical aspects of their bids.

Once the negotiations begin in earnest, they could take weeks or months. Commerce Minister Neoclis Sylikiotis said recently that the contracts should be signed in early 2013.

The four offshore prospects are contiguous, lying north and north-east of Block 12, where US firm Noble Energy has a concession to drill and has reported significant gas finds.

Block 9 is considered to be the ‘prime cut’ of the four prospects, having received eight bids in total.

But questions are being asked after it emerged that the government altered the order of ranking of the bids for Block 9, eventually picking the TOTAL-NOVATEC consortium despite it being ranked fourth or fifth.

The government has denied anything untoward in changing the order of ranking for Block 9, arguing that its final decision took into account additional parameters, such as matters of national security.

Two separate assessments of the bids were made: one by the French consultancy Beicip Franlab, the other by the Energy Service of the Commerce Ministry. But the final decision rested with the Cabinet, on the recommendation of the commerce minister.

Daily Phileleftheros yesterday published what it claimed were the full data on the respective scores awarded by Beicip and the Energy Service.

The TOTAL-NOVATEC bid scored 227.7 points, 50 points short of the top-ranked bid submitted by the Italian-Korean consortium consisting of ENI and KOGAS.

A breakdown of the scores showed that TOTAL-NOVATEC’s technical tender got 60.6 points, compared to ENI-KOGAS’s 60.8. On the financial tender, TOTAL-NOVATEC scored 162.1, to ENI-KOGAS’s 216.9.

The paper said also that TOTAL-NOVATEC’s proposal for a signature bonus was 400 per cent lower than that of ENI-KOGAS. The report went on to ask whether, during the negotiations that have now begun, the French-Russian consortium would be able to up its offer to meet that submitted by the top-ranked bidder.

Phileleftheros said moreover that some of the companies not selected for the four licences were now gathering data with a view to contesting the competition process.

Published by: www.cyprus-mail.com