By Simon Trevezas
Noble Energy is a major energy company that operates all around the world and is the biggest shareholder (70%) for Aphrodite’s reservoir (block 12) of Cyprus EEZ. The company seeks to seize every opportunity for growth and profit and for that to happen require offshore development projects to proceed immediately. Failure to effectively execute major development projects could result significant delays, cost over-runs, damage to reputation, and limitations on growth with negative impact on operating results, liquidity and financial position. Primary goal for the company is to focus on the areas where they have competitive advantages such as in northeast Nevada, deep-water Gulf of Mexico, offshore West Africa, offshore Eastern Mediterranean and Falkland Islands.
The Eastern Mediterranean is one of the core operating areas, where already had eight consecutive natural gas discoveries in recent years.
Source: Noble Energy Annual Report
Concerning the offshore Cyprus Project, Noble clarifies the importance of developing a profitable scenario or even farm-out arrangements within 2015. For that reason, it is mentioned the intention for extension of the leases in accordance with the licenses terms. None the less, the offshore projects entail significant technical and other subsea difficulties which require advance innovative technology and experienced personnel, in order to be accomplished. All of the above require huge investments to be made and by today’s oil price it seems cost ineffective to proceed in production. From the other hand, it is crucial to develop a successful scenario in order not to jeopardize future growth.
Although the East Mediterranean is a promising basin, no hydrocarbons have been set to production yet and as long as this inaction continues the more uncertainty and risk will be provoked. Noble is trapped within a cross road of decisions and must evaluate all risk factors in order to make the best move but mostly must put pressure to Cypriot and Israeli governments. Israel must resolve political infightings and delays concerning the Leviathan reservoir and proceed on producing the 21Tcf of natural gas. Cyprus, has a forward thinking and concentrates on creating political-economical allies in order to be ready to export directly to nearby markets, immediately when production starts. Unfortunately, Cyprus willingness to create prosperity and run developments comes into conflict with the unstable political environment of Syria and Lebanon who are facing tremendous internal problems, without excluding Israel and Egypt who might occasionally have turmoil.
In the end, Noble Energy vision for energising the world appears to stumble on the East Mediterranean but let’s do not forget that this is the most acquaintance environment which almost all oil and gas industry operates in.
Simon Trevezas,
Oil and Gas Analyst for CyprusGasNews
Email: [email protected]
