According to an official press release, the Council of Ministers approved on Wednesday the renaming of CNHC to Cyprus Hydrocarbons Company Ltd (CHC) as well as the proposed regulations for the amendment of its Articles of Association.

The Council was also informed by Energy Minister Yiorgos Lakkotrypis on the intention of his ministry to amend the 2007 Law on Hydrocarbons, with a view to appoint non-executive members of the CHC Board as well as to regulate the issue of the monitoring of the company by the General Auditor.

Published by:  www.cna.org.cy

ENERGY giant Total is looking to participate in the development of a gas liquefaction terminal, it emerged on Wednesday, as the cabinet approved a draft MoU with the French company.

Reports said the MoU was approved and will be signed in the next days.

Total has secured two offshore blocks in the Cyprus Exclusive Economic Zone.

Cyprus has already signed a similar agreement with US oil company Noble Energy, which has discovered natural gas in an offshore field known as Block 12.

Energy Minister George Lakkotrypis said the terminal remained Cyprus’ strategic target.

Briefing reporters about his recent visit to Israel, the minister said that on the agenda of his meetings were issues concerning the possibility of natural gas supply to Cyprus for electricity as well as an agreement to jointly exploit hydrocarbon reserves, which are located at the border of the Exclusive Economic Zones of both countries.

Two days ago, the European Commission approved three projects of common interest which concern Cyprus.

One of them is a feasibility study for a natural gas pipeline from Cyprus to Greece.

Lakkotrypis said this was discussed last week during a visit of a Greek delegation to Israel and was also the focus of a discussion held between the Cypriot delegation that visited Israel.

“We have made clear that according to our own techno-economic studies, our strategy remains the natural gas liquefaction terminal”, he said.

The minister added that the possibility to have a pipeline from Israel to Cyprus and then to Greece is something that will be clarified by the project of common interest, which was approved by the European Commission.

On Monday, the European Commission announced a list of 250 infrastructure projects that may qualify for €5.8 billion of funding.

Published by: www.cyprus-mail.com

Published by: www.incyprus.philenews.com

following PCIs:
3.10.1 Interconnection between Hadera (IL) and Vasilikos (CY)

3.10.2 Interconnection between Vasilikos (CY) and Korakia,Crete (EL)

3.10.3 Internal line between Korakia, Crete and Attica region (EL)

Essential equipment and/or installation for interconnecting the Cypriot, Israeli and the Greek transmission networks (offshore).
The project will have a capacity of 2000 MW and a total length of around 820 nautical miles/around 1518 km (329 km between CY and IL, 879 km between CY and Crete and 310 km between Crete and Athens) and allow for reverse transmission of electricity. The dumping depth of the cable will exceed the 2000 m under the sea in some areas between IL and CY. The dumping depth of the cable will exceed the 2000 m under the sea in some areas between IL and CY and will exceed the 2500 m under the sea in some areas between CY and EL.

7.3. Cluster of gas infrastructures and associated equipment for the transportation of new sources of gas from the offshore fields in the East Mediterranean including one or more of the following PCIs:

7.3.1 Pipeline from offshore Cyprus to Greece mainland via Crete

7.3.2 LNG storage located in Cyprus [currently known as the "Mediterranean Gas Storage"]

7.3.1.: New onshore and offshore pipeline linking the newly discovered fields in Levantine Basin (CY, IL) via Crete to Greece Mainland with 2 routing options: the first is a pipeline of approximately 1700 km (1200 km offshore, 500 km onshore), while the second proposes a pipeline with the length of approximately 1550 km (1530 km offshore, 20 km onshore).
The pipeline will have a throughput capacity of 24.5 MCM/day, with a delivery capacity of 2.5 to Cyprus and 22 to Greece Mainland. The total power for the options will be around 390 MW.

7.3.2.: LNG storage facility associated with the LNG terminal in Vassilikos aiming at the storage of gas from the Levantine Basin (Israel and Cyprus) in liquefied form onshore Cyprus, for further transport namely to LNG Receiving and Regasification Terminals located in the Mediterranean Sea. The storage will have a working gas volume of approximately 109 MCM/day and withdrawal/injection capacity of 18.1 MCM/day at initial capacity.

Here is full PDF  2013 projects list for each EU country : Click Here

AT FIRST glance the official announcement of the appraisal drilling results for the Aphrodite natural gas field may not be the best news to an economy experiencing a severe economic recession.

Preliminary findings allude to a range of natural gas volumes of 3.6 trillion cubic feet (tcf) to 6 tcf (102 bcm to 170 bcm) with a gross mean of 5 tcf (142 bcm), less than earlier tests had suggested. Things though are not as bleak as they were portrayed.

One may wonder though, why was the gas quantity originally overestimated?

There are several possible reasons. We need only note that the reservoir resides at a water depth of about 1,600 m of seawater and a total depth of about 7,200 m.

Not surprisingly, interpreting invisible findings is often a risky, costly and tedious business.

In order to reach credible estimates, an offshore operator (such as Noble Energy) collects data using various techniques with the ultimate purpose of minimising uncertainties while understanding the characteristics of a hydrocarbons field as exhaustively as possible.

For instance, data are collected using geophysical methods, such as seismic and magnetic surveys, linewire logs while drilling, such as electric conductivity and acoustic measurements and many others (e.g., pressures, temperatures, permeability- ability of hydrocarbons to flow, etc.).

Hence, the less detailed and narrower the data, the higher the degree of uncertainty of the gas estimates.

Once an appraisal well is drilled, though, more data can be fed into the existing reservoir model which helps narrow down even further the level of uncertainty. A major factor believed to explain the downsizing of the gas volume is the thickness of the reservoir (net pay thickness).

While exploratory well A-1 encountered a net pay of 94 m, appraisal well A-2 identified a net pay of about 40 m.

Logically, halving the reservoir thickness shrinks the gas quantities that the formation can conceal. It also turned out that the gas formation is more complex than originally thought.

According to published sources, the reservoir is characterised by three transverse faults which divide it into four compartments.

Geologically, there is a strong probability that the reservoir is not a uniform structure but subject to discontinuities which obstruct the uninterrupted flow of gas.

This is why the minister of energy unveiled the intention of the Noble consortium to drill another appraisal well. Evidently, the appraisal process is still a work in progress.

There is also the need to process the wealth of data gathered during the first appraisal well and update the prevailing geological and other reservoir models.

Variations in rock porosity (capacity of reservoir to hold hydrocarbon quantities) can also play an important role regarding gas volumes.
Seismic uncertainties could also add to the explanation as to why the gas volumes were less than first expected.

Despite the effectiveness of 3D seismic surveys in detecting the presence of a geological cap within which hydrocarbons could lie, imperfections still cast doubts as to the level of accuracy of the technique.

Then there is the possibility of a fault impermeable seal which might be held accountable for permitting some of the natural gas to escape from the reservoir and migrate to different geological strata.

The already detected transverse faults are likely to blame. Geological data indicate that this seal is made up of Messinian evaporites (salt layers) which formed some 60 million years ago.

Owing to their small size, gas pockets which form from migrating hydrocarbons may be uneconomical to extract. In addition, the accuracy of linewire logs diminishes with distance.

In aggregate, the first exploratory well gas estimates are subject to considerable deviations.

Good news also surrounds the Aphrodite gas field. Usually companies resort to further appraisal wells when there are strong indications as to the existence of additional gas (also known as reserves growth).

It is also of paramount importance that the gas field can be converted from a resource into a proved reserve (with a 90 per cent probability of being extracted).

Furthermore, 3D seismic acquisitions conducted on behalf of Noble in Block 12 have identified some eight other hydrocarbon plays (prospective gas fields) some of which are believed to contain about 1 to 2 tcf of natural gas.

Another positive development is the fact the Aphrodite field consists of dry gas (about 98 per cent methane) which requires minimal processing before being pumped onshore.

Whatever the outcome, the Cypriot exclusive economic zone remains largely unexplored. More promising hydrocarbon discoveries are in the pipeline. The recent discovery of oil offshore Ashdod, in Israel, adds to the climate of euphoria.

Tracing oil in the Cypriot EEZ is probably a matter of time. Being second-time lucky will forever alter Cyprus’s future and will turn the tide in our favour. In the meantime, positive thinking and patience will prove invaluable.

Constantinos Hadjistassou is lecturer in Marine Hydrocarbon Technologies at the University of Nicosia and partner at Energy Sequel (www.energysequel.com).

Nicosia, Oct 10 (CNA) – The Cabinet on Thursday approved the establishment of a Ministerial Hydrocarbons Committee that will be responsible to closely monitor the developments in the field of natural gas.

Acting Government Spokesman Victoras Papadopoulos speaking to the press after the Cabinet’s meeting said that the Minister of Foreign Affairs will be presiding the Committee. Ministers of Energy, Defense and Communications will also be participating.

Published by: www.cna.org.cy

NOBLE Energy, operators of the Block 12 offshore licence, has reportedly renewed a proposal for piping gas from the Aphrodite well for the purpose of domestic electricity generation.

Daily Politis writes that the Houston-based energy company has quoted a delivery price of $9 or $10 per million btus (mmbtu).

That’s significantly lower than the price offered by Itera during the ‘interim gas’ tender procedure. Itera’s offer is understood to have been around $15.5 per mmbtu.

Politis said the cost of electricity generation – and thus the price of electricity to end-consumers – could on paper drop by 15 to 20 per cent if Noble’s proposal were implemented.

The deputy government spokesman yesterday neither confirmed nor denied reports of Noble’s offer, saying only that the government “is exploring all avenues…regarding interim gas so that the cost of electricity can be reduced.”

Noble envisages extracting the gas with a spar platform, the ‘Red Hawk’, which is currently located in the deepwater Gulf of Mexico. The gas would be brought ashore via a subsea pipeline, to be built by

Noble, and burned to generate electricity for domestic consumption.

Advanced negotiations are said to be underway between the energy ministry and Noble. The proposal has a tight window, because the ‘Red Hawk’ platform is set to be decommissioned in January of 2014.

According to Politis, the US firm is now proposing use of the spar platform for a period up to 20 years. The Americans are said to intend to build a 20 to 24-inch pipeline. This large-diameter pipeline could subsequently be used also for the more ‘permanent’ solution of piping gas to an LNG terminal at Vasilikos for the purposes of export and domestic consumption – allowing Noble to kill two birds with one stone. The total investment cost to Noble would be in the region of $1bn, the paper said.

Sources told the Mail that Noble’s original spar platform pitch – made a few months back -involved a five-year contract, for €12 per mmbtu. Under that initial offer, Noble would lay a 12-inch pipeline capable of piping up to 100 million cubic feet of gas a day. Under that scenario, Noble would have had to construct another larger pipeline for the subsequent LNG project.

Noble’s initial proposal entailed a total investment cost of some $800 million, with the spar platform accounting for around $300 million.

Assuming the government and the Americans clinch a deal, the spar platform could be moved to Cypriot waters by next summer, and actual gas production could start in 2016.

By contrast, an LNG plant is not expected to be operational anytime before 2019.

Charles Ellinas, chairman of the Cyprus National Hydrocarbons Company (CNHC), stressed the need to push ahead with the spar platform project.

“It’s partly our own gas, so the net cost would be less than the sales price, since around 60 per cent of the profits would go to Cyprus,” he said.

But Cyprus needs to move swiftly to make the project happen. Noble would need at least a serious commitment from the government by the end of this month if it is to go ahead and make a gambit for buying the spar platform. Next, a formal agreement between the two sides would ideally have to be signed by December.

A possible complication could be the current tender for the ‘interim gas’ solution. Although talks between the Natural Gas Public Company with Itera and then Vitol came to nothing, the tender is still open. The government cannot move until and unless the tender process has been wrapped up.

In a related development, the Cabinet yesterday decided the establishment of a Ministerial Committee on Hydrocarbons and Geopolitical Issues.

The committee will be headed by the foreign minister and comprise the ministers of energy, defence and transport.

Published by:  www.cyprus-mail.com

Anastasiades held talks with the Crown Prince of the State of Kuwait Nawaf Al-Ahmad Al-Jaber Al-Sabah as members of the delegations of the two countries discussed bilateral issues.

“We had the opportunity to explain the possibilities that Cyprus offers but also to reiterate the friendly relations between the two countries,” the president said. “I discerned a very friendly climate and a willingness (on the part of Kuwait) to contribute to the effort that we are making for the recovery of the economy.”

Anastasiades is accompanied by the island’s foreign, finance, and energy ministers.

Earlier in the day, Anastasiades met with the Prime Minister of Kuwait, Jaber Al-Mubarak Al-Hamad Al-Sabah.

The two delegations discussed a number of subjects, including bilateral cooperation on investment and further strengthening of the political, economic, and commercial ties between the two countries.

Following the talks, Cypriot and Kuwaiti officials signed a series of bilateral agreements including cooperation in fighting terrorism, organized crime, drugs trafficking, and illegal migration.

Agreements were also signed for cooperation in the areas of tourism, education, and health.

Energy Minister Giorgos Lakkotrypis, who also holds the commerce and tourism portfolios, said he discussed ways to increase the tourist flow from Kuwait to Cyprus.

Lakkotrypis also exchanged views with the Kuwaiti oil minister whom he invited to Cyprus.

“I invited him to Cyprus to discuss how Kuwait can get involved in activities we are engaging in,” Lakkotrypis said.

During the meeting between the two countries’ foreign ministers, Kuwait announced a €200,000 donation to the islands committee for missing persons.

Published by: www.cyprus-mail.com

Eight ministers accompanied the premier as Greece and Israel held their first-ever government-to-government meeting. The talks between Environment Minister Yiannis Maniatis and his counterpart Uzi Landau focused on major energy infrastructure projects, including the construction of a gas pipeline between Israel, Cyprus and Greece, and the transport of liquefied gas with Greek ships.

“Greece and Cyprus are both members of the European Union and we believe they can be a stable mediator between Israel and Europe,” said Samaras. “Both countries have energy reserves and can work with Israel to tap these resources and to transport them.”

During his trip, Samaras met with Israeli Prime Minister Benjamin Netanyahu, Israeli President Shimon Peres and Patriarch Theophilos of Jerusalem. His talks with Netanyahu appeared to take place in a warm atmosphere. They remarked that this was “just the start” of strategic cooperation between the two countries.

Netanyahu encouraged Israeli businessmen to seek out investment opportunities in Greece, suggesting that if they move quickly they will be able to maximize their profits. Protocols of cooperation were signed by the two sides on a series of issues, including tourism, combating crime, firefighting and even joint movie productions.

Netanyahu also took an opportunity during the joint press conference to reiterate his position on Iran. “The greatest threat to peace and security of the region and of our world is Iran’s pursuit of its nuclear weapons program,” Netanyahu said. “Iran’s presidents might change, but that country’s nuclear program continues to expand.”

Greek sources said Iran did not come up during the two leaders’ talks.

Published by: www.ekathimerini.com

Anastasiades held talks with the Crown Prince of the State of Kuwait Nawaf Al-Ahmad Al-Jaber Al-Sabah as members of the delegations of the two countries discussed bilateral issues.

Anastasiades is accompanied by the island’s foreign, finance and energy ministers.

The two delegations discussed a number of subjects, including bilateral cooperation on investment and further strengthening of the political, economic, and commercial ties between the two countries.

Following the talks, Cypriot and Kuwaiti officials signed a series of bilateral agreements including cooperation in fighting terrorism, organized crime, drugs trafficking, and illegal migration.

Agreements were also signed for cooperation in the areas of tourism, education, and health.

Earlier in the day, Anastasiades met with the Prime Minister of Kuwait, Jaber Al-Mubarak Al-Hamad Al-Sabah.

Published by: www.cyprus-mail.com

Addressing Monday the opening ceremony of the Maritime Cyprus 2013 conference which takes place in Limassol, on the south coast, the President also referred to the Cyprus issue as well as Turkey’s ban on Cypriot-flagged ships, calling on the international community and the EU to exert pressure on Ankara.

Lifting this embargo is part of a package-proposal, put forward by the Greek Cypriot side, on a set of Confidence Building Measures which also includes the return of the Turkish occupied town of Varosha, on the eastern coast, to its rightful and lawful owners and inhabitants.

He also said that as a consequence of the Eurogroup decision on Cyprus, a number of shipping companies on the island have been affected, however the resident shipping industry has remained in Cyprus, demonstrating its confidence in the shipping industry and economy.

The President said that Cyprus offers a number of fiscal and economic advantages in the shipping industry, which include competitive ship registration costs and annual tonnage taxes, favourable tax regime for ship management and other international business enterprises and generally low operational and construction costs.

Published by:  www.incyprus.philenews.com

Published by:  www.cna.org.cy

Published by: www.cna.org.cy

PRELIMINARY results from appraisal drilling on Block 12 show about 5 trillion cubic feet (tcf) of natural gas, lying at the lower end of 2011 estimates by US Noble Energy, authorities said yesterday.
The Cyprus government, Noble Energy and its partners Delek Drilling and Avner Oil simultaneously announced the appraisal drilling results from Block 12.

Exploratory drilling carried in 2011 out by Noble Energy at Block 12 showed an estimated gross resource range of 5 to 8 tcf, with a gross mean of 7 tcf.

The updated figures show the offshore field holds between 3.6 tcf to 6 tcf of natural gas. “We anticipate additional appraisal activities are necessary to further refine the ultimate recoverable resources and optimise field development planning,” said Keith Elliott, Noble’s senior vice president, Eastern Mediterranean.

“The appraisal drilling results prove there are substantial recoverable quantities of natural gas in the Aphrodite field, with important production capabilities,” Energy Minister Giorgos Lakkotrypis told reporters.

Lakkotrypis said that preliminary calculations on reserves of 4.5 tcf indicated a net profit for Cyprus of between US$12 billion to US$18 billion (between €8.8 billion and €13.2 billion) over a 14-year period, and gas with a gross value of US$50 billion (€36.7 billion) for Noble. But he said estimates were “very preliminary, considering uncertainties in the market”.

Lakkotrypis said they remained committed to the construction of a liquefied natural gas (LNG) plant on Cyprus.

“Despite the lower quantities we announce today compared to those of 2011, the confirmed reserves affirm a particularly important reserve of natural gas,” Lakkotrypis said.

The reserves in Block 12’s Aphrodite field are the third largest in the Levantine Basin, which lies in the seas of Cyprus, Lebanon, and Israel. Noble also has concessions in Israeli natural gas prospects.

Noble’s Cyprus Country Manager John Tomich said the LNG project remained their “strategic priority in terms of commercialising the gas”.

“What we found was confirmation of world class natural gas,” Tomich said.

Cyprus and Noble Energy and its partners signed in July a memorandum of understanding with a view to jointly seeking investors for the LNG plant, estimated to cost up to €8 billion euros.

The aim is to agree on a special purpose vehicle by December, prior to securing an engineering procurement construction (EPC) agreement with a contractor to start works on the LNG plant by early 2016.

But for the agreement to go through, Noble would need to make a final investment decision.

The head of the Cyprus National Hydrocarbons Company Charles Ellinas said in June that if the Aphrodite well were to yield less than 6 tcf – the threshold for making the LNG plant commercially viable – the difference could be met by discoveries in a second, smaller field within Block 12 that could hold about 2 tcf to 3 tcf.

Noble is expected to do an appraisal drilling in the Aphrodite Field – sooner rather than later – and also more exploratory drilling in another field in Block 12 within next year. Tomich said they were also analysing the data from a 3D survey in the block that has identified at least six separate structures indicating more natural gas. The data will help Noble prioritise where to drill next.

Cyprus has signed contracts with the ENI/KOGAS consortium for hydrocarbons exploration in blocks 2, 3 and 9 and with French TOTAL for blocks 10 and 11, all in its exclusive economic zone. ENI/KOGAS are expected to begin exploratory drilling in the third quarter of 2014, with TOTAL following suit in the first quarter of 2015, Lakkotrypis said.

The more gas is found, the better Cyprus’ outlook in securing long-term buyers. Ellinas warned late last month that an increasingly competitive environment in a growing LNG market meant that Cyprus needed to start LNG exports by 2020. Cyprus needed to avoid delays in order to secure long-term buyers and sales contracts, he said.

Lakkotrypis would not say yesterday whether the discovery of lower-than-expected quantities would entail a delay in the LNG plant project.

But he said they needed to bear in mind known parameters when assessing the viability of an LNG project and adjust factors such as a plant’s capacity accordingly.

“The quantities are not the challenge. The amounts are there. The challenge is in the timing,” Lakkotrypis said.

Although authorities have said that natural gas is not a panacea for the island’s financial troubles, the discovery of natural gas bears hope for the mid-term. Cyprus came close to financial ruin in March, as it desperately tried to secure a 10 billion euro bailout.

Published by: www.cyprus-mail.com

“Results from the Cyprus A-2 well have confirmed substantial recoverable natural gas resources and high reservoir deliverability,” said Keith Elliott, Noble Energy’s Senior Vice President, Eastern Mediterranean. “While the A-2 location has successfully defined the northern area of the discovery, we anticipate additional appraisal activities are necessary to further refine the ultimate recoverable resources and optimize field development planning.”

Noble said evaluation of drilling data, wireline logs and reservoir performance information has resulted in an updated estimate of gross resources of the field ranging from 3.6 trillion Tcf of natural gas to 6 Tcf, with a mean of approximately 5 Tcf.

Exploratory drilling carried in 2011 showed “an estimated gross resource range of 5 to 8 trillion cubic feet (Tcf), with a gross mean of 7 Tcf.“

Noble Energy operates Block 12 offshore Cyprus with a 70 per cent working interest.  Delek Drilling and Avner Oil Exploration each have 15 percent working interest.

Published by: www.cyprus-mail.com

According to a press release, theCyprus A-2 well was drilled to a total depth of 18,865 feet in 5,575 feet of water.

Production testing procedures were performed over a 39-foot section of the upper Miocene reservoir.

The test, limited by surface equipment, yielded a maximum flow rate of 56 million cubic feet per day (Mmcf/d) of natural gas.

Performance modeling indicates development wells in the reservoir should have capacity to deliver up to 250 Mmcf/d.

Evaluation of drilling data, wireline logs and reservoir performance information has resulted in an updated estimate of gross resources of the field ranging(1) from 3.6 trillion cubic feet (Tcf) of natural gas to 6 Tcf, with a mean of approximately 5 Tcf.

The Cyprus A structure represents the third largest field discovered to date within the Deepwater Levant Basin.

Keith Elliott, Noble Energy’s Senior Vice President, Eastern Mediterranean, commented, “Results from the Cyprus A-2 well have confirmed substantial recoverable natural gas resources and high reservoir deliverability. While the A-2 location has successfully defined the northern area of the discovery, we anticipate additional appraisal activities are necessary to further refine the ultimate recoverable resources and optimize field development planning. In the meantime, we continue to identify and advance multiple development options. In addition to the Cyprus A discovery, we are also encouraged about the further exploration potential in Block 12. We have recently completed a 1,100 square mile 3D seismic acquisition, which will be interpreted over the next several months.”

Noble Energy operates Block 12 offshore the Republic of Cyprus with a 70 percent working interest. Delek Drilling and Avner Oil Exploration each have 15 percent working interest.  — (FG/Agencies)

Published by:  www.famagusta-gazette.com

Titled ‘Shipping Today’, the conference will discuss the world shipping industry’s hot issues in three distinct parts: remodelling the shipping, environment; looking ahead to the future. The conference will be attended by approximately 700 participants including the International Maritime Organisation’s Secretary General Koji Sekimizu, European officials and prominent ship-owners from all over the world.
“We are confident the organisation of the Maritime Cyprus Conference 2013 will give further impetus to the Cypriot shipping and will promote our country internationally,” Communications and Works Permanent Secretary Alecos Michaelides told a news conference yesterday.

Maritime Cyprus takes place every two years.

Michaelides said that Cyprus now has the 10th largest merchant fleet internationally and the third in the European Union, and was one of the biggest shipmanagement centres internationally.
Shipping contributes 6 per cent to GDP every year, Michaelides said. “In these difficult times shipping could play a leading role in the efforts to achieve growth and the attraction of foreign investments to our island,” he said.

The opening ceremony will take place on October 6 during a reception hosted by President Nicos Anastasiades at the presidential palace. Anastasiades will also address the conference the next day.
Michaelides said the shipping sector had overcome the initial shock of the bailout.

“There were consequences and difficulties, which have been overcome following actions of the ministry, the department of merchant shipping and all stake holders,” Michaelides said.

He also said that despite the 1987 Turkish ban on Greek Cypriot air and sea traffic, Michaelides said the ministry was trying to promote the Cypriot flag, “at least for ships which don’t dock in Turkish ports.”

In May 1997, Turkey issued new instructions to its ports extending prohibitions against ships under a foreign flag (of any nationality) sailing to Turkish ports directly from any Cypriot port under the effective control of the Republic of Cyprus or against ships of any nationality related to the Republic of Cyprus in terms of ownership or shipmanagement.

Also yesterday a meeting was held on Cyprus’ Integrated Maritime Policy, involving seven government ministries. The ministers decided on the final and unified text for Cyprus’ national strategy for the Integrated Maritime Policy, which will be submitted to the Cabinet to become the Republic’s official document.

The Integrated Maritime Policy is a top EU priority, seeking to provide a more coherent approach to maritime issues, with increased coordination between different policy areas. The EU seeks to achieve sustainable and viable management of the sea, which would offer great economic opportunities.

The meeting was attended by ministers of transport, foreign affairs, interior, defence, justice, energy, and agriculture.

Published by: www.cyprus-mail.com

Published by: www.incyprus.philenews.com

Published by:  www.incyprus.philenews.com

Published by:  www.incyprus.philenews.com

FORMER ENERGY chief Solon Kassinis yesterday called on the press to stop being alarmist about the size of gas reserves in Block 12 of Cyprus’ exclusive economic zone (EEZ), claiming the country’s hydrocarbon reserves were “huge”.

Speculation over the size of gas reserves estimated in Block 12’s Aphrodite field following an appraisal drilling by Noble should stop, he said, calling for patience until the US-based company and energy minister announced the official results.

Local press widely reported on Sunday that the results of the appraisal well in Block 12 were not as high as expected, with the estimated gas reserves in the Aphrodite field coming lower than the minimum amount considered necessary to warrant the building of a liquefaction (LNG) plant.

On the bright side, the press reports said the quality of the gas was excellent while eight other gas fields of smaller size than Aphrodite are believed to have been located within Block 12.

The allegedly smaller than expected size of the Aphrodite field and the need to confirm reserves in other fields of Block 12 are expected to set back the government’s plans for building an LNG terminal by anywhere between six months and two years, wrote the reports.

Speaking to state broadcaster CyBC, Kassinis said the media needs to stop publishing alarmist reports and wait for the official results to be announced in the coming days.

The executive vice-chairman of the Cyprus National Hydrocarbons Company (CNHC), who handed in his resignation to the President two months ago, said he expected another appraisal drilling to take place before even considering making conclusions on the total gas reserves in the Aphrodite field.

He highlighted that the rig which has just finished work in Block 12 is now going to the Israeli EEZ to drill yet another appraisal well in the Israeli offshore Tamar field.

“They’ve done three drillings. They started with (estimated findings of) 3.7 trillion cubic feet (tcf) and ended with 9.7 tcf (of gas). Leviathan, their biggest reserve, started with 14 tcf, went to 16 tcf and then 18 tcf. So why before we even start are we so negative?” he asked.

Kassinis noted that three-dimensional surveys completed a month ago have found geological structures in other parts of Block 12 that require drilling to see what quantities of gas exist there. In addition, he argued, there are “many more reserves” in other blocks in Cyprus’ EEZ.

“The message is that we have a lot of gas. We should not be concerned,” he said.

“I assure you that the deposits of natural gas that we have in Cyprus, and even of oil, are huge. This is the hope we have to give to people for the future. We should certainly not be alarmist,” he added.

Published by:  wwwcyprus-mail.com

If confirmation of what they had seen the light of day, that the reserves of the deposit amount Venus below 5 trillion cubic feet, does not mean that overturned the plans to create the terminal, said Mr.Ellinas , adding that the terminal will not fix only for the deposit of Venus (Block 12).

The aim of the “Solon Kassinis Energy Training School & Research Centre” is to prepare  young Cypriots through professional training, enabling them to secure employment in the field of hydrocarbons thus creating strong potential for further advancement in the energy development sector.

The Centre will be situated in the new wing of the University which will be completed by the end of September 2013.

www.uclancyprus.ac.cy

WHY DID talks between the Natural Gas Public Company (DEFA) and Itera crash and burn? If the Electricity Authority of Cyprus (EAC) is to be believed, not only did the Russians’ quoted price fail to lower the cost of electricity, it would actually have ended up increasing electricity bills to end-consumers. Itera, in turn, insists the opposite holds true, and accuses the Cypriots of constantly moving the goalposts.

Forget Itera for a second. We’re being told that natural gas won’t lower the utility’s power generation costs and thus the bills to us paying customers. Sounds counter-intuitive, doesn’t it?

During a big powwow at the Palace on September 2, experts advised the President that Itera’s offer was ultimately not cost-effective. At one point a piqued Anastasiades reportedly blurted out: “You mean to tell me it’s not beneficial even if they gave us the gas for free?”

Good question. Incidentally, at that meeting, an official apparently told the President that for natural gas to be cost-effective it had to be sold to Cyprus for around $11.5 per mmtbu.

Which is weird, to say the least, because $11.5 is even lower than what LNG currently goes for on the spot market (between $12 and $13).

The Mail has looked at a barrage of data – fuel prices, electricity generation numbers, calorific values of the different fuels, thermal efficiency of the turbines – the whole shebang. Without laying claim to expertise, the Mail ran a battery of ‘simulations’. In every single case calculations showed that total fuel costs would drop with natural gas.

Under even the ‘harshest’ scenarios for natural gas, Itera’s final, all-in price – understood to be $15.5 per mmbtu – yielded cash savings of between 6 to 8 per cent.

A crucial clarification should be made: the cash spent on fuel, and the relative cost of generating electricity from that fuel, are not one and the same. It’s possible for example to spend less on fuel in absolute terms, but that doesn’t necessarily mean your cost for electricity generated (per kilowatt-hours or per mmbtu) is also lower. And as far as the EAC is concerned, the cost of generation is the bottom line.

Under the tender, DEFA is not obliged to sign a contract unless the price of electricity to end-consumers drops, to quote, “substantially.”

DEFA/EAC won’t spell out what “substantially” is. At the end of the day, they say, it’s the government that calls the shots. Fair enough. The energy minister has been quoted as saying that a reduction of at least 10 per cent in electricity bills would be sufficient.

There do appear to be grounds for insisting on the 10 per cent. Whether they’re justified is another matter. Apparently DEFA/EAC want a ‘buffer’ of between 10 to 15 per cent, in case ‘unknown parameters’ in utilising natural gas technology drive up the actual generation costs and eliminate any benefits compared to liquid fuels.

For the foreseeable future the power utility plans to burn only heavy fuel oil, or mazut.

But is LNG cheaper than mazut? Using figures from an analysis done by the EAC itself (a confidential report dated August 2, more on that later), mazut with a 1 per cent sulphur content goes for $561 per metric tonne; mazut with a 0.23 per cent sulphur content is $761; and diesel (or gas oil) costs $870. And LNG is said to cost $620 per tonne, although strangely a footnote states that this includes a DEFA “administration fee” of $0.5 per mmbtu.

But the devil is indeed in the details. One tonne of LNG or natural gas yields anywhere between 48 and 52 mmbtu. By contrast, one tonne of oil equivalent produces 40 to 42 mmbtu. Putting it simply, per unit, LNG generates more energy than does fuel oil or diesel, thus requiring a lesser amount of it to produce a certain amount of energy.

This has to do with the higher calorific value – or energy content – of natural gas. To illustrate the point, and according to the EAC’s so-called “working paper” of August 2, for 2015 (the first year of the contract) the utility would buy 745,000 tonnes of mazut to generate the required electricity by the grid. With natural gas, it would need 484,000 tonnes of the fuel, plus some small amounts of fuel oil.

So LNG may be more ‘expensive’ on paper, but that by no means is the bottom line. What matters is how much of that fuel you actually need – plus a host of other factors.

There are several elements which, combined, determine the cost of electricity generation – and hence the price of electricity. But the main ones are three: a fuel’s calorific value; the efficiency of the machines when burning a fuel; and last but certainly not least the price of the fuel, either per quantity or per energy units (measured in British Thermal Units).

Using the same EAC internal document – leaked to the media within hours of the September 2 meeting at the Palace – we can calculate the respective costs for liquid fuels and for natural gas.

We’re not taking into account things like fuel storage fees, excise duties, carbon emissions penalties and operation and maintenance costs under the two scenarios (liquid fuels and natural gas). But even factoring these in would cancel each other out.

Before we go further, some basics: a watt-hour is a unit of energy equal to the power of one watt operating for one hour. One gigawatt-hour (GWh) is equal to one billion (1,000,000,000) watt-hours. One GWh is roughly equal to 3,412 mmbtu no matter which fuel is concerned. And one mmbtu equals 293kWh.

The EAC document says that the total power to be generated by the grid in 2015 will be 3,665 gigawatt-hours. Deducting the power to be generated from wind energy (317 GWh), we are left with 3,348GWh.

Still there? Good. So, 3,348GWh multiplied by 3,412 gives us a total of 11.4 million mmbtu (or 11.4 trillion btus) of energy generated by the grid. The cost was 484,000 tonnes of natural gas (or 24 million mmbtu) at $15.45 per mmbtu, totalling $370m. In addition, small amounts of fuel oil are to be purchased in 2015 for an extra $24m. Grand total: $394m. So the overall generation cost was 394/11.4, or $34.56 per mmbtu.

In the liquid fuels-only scenario, 3,346 Gwh were similarly generated (again excluding 319GWh of wind energy). That’s equal to 11.4 million mmbtu. The total fuel costs (mostly mazut, with very small quantities of diesel) come to 745,000 tonnes of mazut at $561 per tonne, giving $418m. Add another 2,823 tonnes for diesel at $870 per tonne gives $2.4m. Grand total: $420.4m. The generation cost is 420.4/11.4, or $36.87 per mmtbu.

From the calculations, natural gas wins out when it comes to either the cash price in absolute terms or to the overall generation cost – but not by much. The cash savings are just 6 per cent, and the difference in generation cost cannot be described as staggering. Perhaps the DEFA/EAC people have a point after all.

But wait. First, the fuel prices used by the EAC are a bit iffy. Mazut (1 per cent sulphur) actually goes for around $610 per tonne, not $561. And mazut (0.23 per cent sulphur) is closer to $800 per tonne, not $761 as cited in the EAC document. With these prices, the total cost of liquid fuels climbs would climb further.

A word here about the thermal efficiencies of machines. In a hypothetical example, 100MWh are generated with a machine rated at 50 per cent efficiency. The original energy in the fuels purchased was: 100MWh multiplied by 100/50, giving 200MWh.

The EAC’s table indicates that natural gas would be fired by the two Combined Cycle Gas Turbines (CCGT) at Vasilikos, whose thermal efficiency according to the EAC is 45.15 per cent, and by the steam turbines at Vasilikos (converted to also burn natural gas) with an efficiency of 38.63 per cent. The CCGTs would generate 2551GWh, the steam turbines 638GWh.

Another 132 GWh would be produced by the two Internal Combustion Engines (ICE) at Dhekelia power plant. Their rated efficiency is 42.16 per cent. And another 25GWh by a steam turbine at Dhekelia at 30.7 per cent thermal efficiency.

Under the EAC’s model (August 2 report), the CCGT turbines – by far the most efficient engines – would be used to produce only about 80 per cent of power generated from natural gas, the remaining 20 per cent coming from the extremely inefficient steam turbines at Vasilikos, which are to be converted to burn natural gas as well.

The upshot is that in the natural gas scenario, the most efficient generators do not appear to be used in the optimal configuration. The reverse holds true in the liquid fuels-only situation.

Ah, the plot thickens. The EAC cites a raft of technical reasons why this must be so. These include, but are not limited to, maintenance schedules or running the CCGTs at lower loads because, to put it in layman’s terms, these engines are ‘unpredictable’. In brief, they don’t want to drive the machines too hard, for safety reasons – basically because CCGTs form part of what is known as the grid’s base-load capacity (the minimum required capacity).

As you’d expect, the August 2 report is replete with technical jargon: de-rating, forced outage rates, spinning reserve, and so on. To quote from one passage: “Due to RES [Renewable Energy Sources] intermittent generation that affects the NG consumption (something which cannot be modelled with our existing simulation tool), the CCGTs’ maximum generation capability is restricted to 180 MW. This restriction is also necessary for the provision of spinning reserve [reserve capacity for safety reasons] and takes into consideration the Forced Outage and the derating of the units to high summer temperatures.”

To decipher all that gobbledygook and cut to the chase, the newer CCGT units – which incidentally cost a combined €500m – are to be under-operated, something which the EAC freely admits to.

Now, were you to generate almost all power from natural gas the benefits would be significant. The catch is, the EAC says natural gas will replace fuel oils only to a degree. The net result is that the benefits of natural gas – high calorific value, efficiency of the CCGT turbines – are ‘thinned out’.

The August 2 document posited doing without the two so-called must-run steam units at Dhekelia in order to “maximise quantities and receive the best possible price from the supplier(s).”

The gist of it was that the supply period was to be extended from 3.5 years (ending September 2018) to six years (from mid-2015 ending mid-2021).

But in the meantime, according to EAC general manager Stelios Stylianou – who also sits on DEFA’s board – DEFA was advised by its lawyers that these new conditions would be regarded as a breach of the terms of the tender.

Thus the EAC scrapped this report, delivering a fresh one just days later. Under this new report, dated August 6, the Dhekelia must-run units would be used after all, thereby reducing the quantities of natural gas needed.

Asked to comment, Stylianou described the initial report of August 2 as merely a “working paper”.

The language of the actual report suggests otherwise. It states that the calculations (for a six-year supply) stem from a “decision” taken at a meeting at the Presidential Palace on July 26 to extend the contract period.

At any rate, the new report of August 6 was the game-changer, though it didn’t scupper the ongoing negotiations between DEFA and Itera.

Given the new (lower) quantities of gas, Itera presumably needed to take a look at its margins and revise its price.

Invoking plummeting demand for electricity due to the financial crisis, in this new state of play DEFA now asked for just 0.5 billion cubic meters per annum (bcma) of natural gas, down from 0.65 bcma as per the August 2 report.

By reducing the gas quantities, the capital costs (liquefaction and re-gasification) become a bigger proportion of the gas price for the supplier.

Despite this, the Russians kept trying. The Mail learns, for instance, that Itera offered a few perks to sweeten the deal, such as building for free a pipeline connecting the gas-receiving buoy in the sea to the Vasilikos power station.

To cut a long story short, it seems that given the short duration of the contract, the limited supplies as well as considerable capital costs, Itera had little leeway to drop its price to the EAC’s satisfaction.

It is for these very reasons that some experts think the ‘interim gas’ tender was always doomed to fail. The timeframe is simply too small for any company – not just Itera – to turn a profit with LNG. Unless of course Cyprus takes a leap of faith and goes for compressed natural gas.

The talks with Itera officially broke down on September 12 and the rest, as they say, is history.

Itera, now wholly-owned by Russian oil giant Rosneft, feels it was taken for a ride. This was made abundantly clear from sources, who spoke to the Mail on condition of anonymity.

To Itera, it seemed like the Cypriots were changing the rules of the game on the fly.

“We never sat down to agree a common set of values…which left a great deal of guesswork,” a source close to the company said.

DEFA and the EAC may or may not be correct about their overall cost analysis. The verdict, one hopes, will come shortly from the auditor-general. Should her findings be made public, at the very least they will shed some light on the EAC’s ‘clandestine’ cost formula.

While we wait for the auditor-general, all sorts of theories – you might even call them conspiracy theories – are doing the rounds. One holds that vested interests (read: fuel importers) are leaning on the EAC not to switch to gas. A variation on this theory goes a step further, but shall not be repeated here as it may be deemed slanderous.

Others believe that secretly the EAC ‘hates’ gas because it fears that private entrepreneurs with power production licences – that’s all they are for now – stand poised to undercut the utility by generating power with gas more efficiently. Yet more suspicion is fueled by the fact that DEFA – regarded by some as the EAC’s twin sister – is by law the sole importer and distributor of natural gas.

Still, even quarters outside Itera describe the whole tender process as clumsy at best.

One industry source summed it up: “The tender was launched in September 2012. The objective was to close a deal quickly before the presidential elections and in this way earn some brownie points for the then government. This left little time to think things through…it was a rush job. When you negotiate with big corporations and keep changing your mind about what you want, you lose credibility.”

The Cypriots may well be right in asserting that Itera’s offer would not reduce generation costs. That remains to be seen. But what can be safely said is that this has less to do with the suppliers than with how well the EAC utilises its own infrastructure.

Published by:  www.cyprus-mail.com

WARS in the Middle East in the first decade of the new millennia used to be about oil. Now they are about natural gas.

Cypriots beware: don’t be hoodwinked by President Obama’s moral posturing and so-called concern that the Syrian regime is using chemical gas. Forget about the issue of whether Assad actually did or not – or if the opposition set up this whole scenario.

The real issue is not about ‘toppling an evil dictator’ or ‘creating a democratic Syria’ but rather the need by certain countries to have a Syrian leader that will agree to having their country be used as a transit country for natural gas from the Gulf.

Until now, the tiny nation of Qatar has spent hundreds of millions of dollars to support the rebels in Syria! Why? Because they love democracy and freedom-fighters?

It is because Qatar is the largest exporter of liquid natural gas in the world and Assad won’t let them build a natural gas pipeline through Syria. Qatar wants to install a puppet regime that will allow them to build a pipeline which will enable them to sell oodles and oodles of their liquefied natural gas to hungry European consumers.

Saudi Arabia is also spending a small fortune to support the rebels in Syria. Prince Bandar bin Sultan also wants to overthrow Assad for his own reasons so that the Saudis can use his country to control the flow of energy through the region.

Then you have the Russians. They are supporting Assad because as their ally, he is helping them to stifle the free flow of natural gas out of the Persian Gulf to Europe where the Russian gas company Gazprom enjoys a massively profitable market.

If Qatar is able to get natural gas flowing into Europe, that will be a significant blow to Russia. Syria, as Russia’s faithful ally is doing everything it can to help out its major backer.

So what does all this have to do with the US, which has no problem with tens of thousands of Syrians being killed in conventional ways but is now all up in arms over the use of chemical weapons?

Quite simple: if the US gets rid of the Assad regime it will bode well for the Saudis and/or Qatar but not for Russia.

Four years ago Qatar proposed a gas pipeline from the Gulf to Turkey, which would more than double its capacity to produce liquefied natural gas (LNG).

Hence Turkey’s sudden turnaround when it comes to Syria which until recently was a staunch ally of theirs.

Turns out Qatar wants to supply gas to the strategic Nabucco pipeline project, which would transport Central Asian and Middle Eastern gas to Europe, bypassing Russia.

Two different routes for such a pipeline were possible. One would lead from Qatar through Saudi Arabia, Kuwait and Iraq to Turkey. The other would be from the Gulf through Jordan and Syria to Turkey.

The following year, Assad pursued negotiations for an alternative $10 billion pipeline plan with Iran, across Iraq to Syria. That would enable Iran to sell their natural gas to Europe from its South Pars field shared with Qatar across Iraq in Syria. The problem is that the Iran-Iraq-Syria pipeline plan contradicted Qatar’s master plan.

The pipeline could be extended to Lebanon and Europe and transform Iran into a major global player in the natural gas market. Obviously, this is something the US would not be too happy with. The pipeline bypasses Turkey thus harming their privileged position as the desired crossroads for energy between East and West.

Hence the Turks siding with the US against Syria, who until the Syrian conflict broke out, was a close ally.
The Memorandum of Understanding (MoU) for the project was signed in July 2012 just as Syria’s civil war was spreading to Damascus and Aleppo. Was it just a coincidence that “freedom fighters” come to the forefront at exactly the same time? The main cities of turmoil and conflict in Syria right now are Damascus, Homs, and Aleppo. These are the same cities that the proposed gas pipelines happen to run through Qatar. Just another weird coincidence?

Don’t be fooled any longer by a US president who is pretending to be concerned about the victims of chemical weapons. The US is seeking to protect its main Gulf allies and to stop Iran and Russia from pursuing the sale of their energy products. That is what the Syrian conflict is about and it has precious little to do with chemical weapons, democracy or freedom for the Syrian people.

The “concern for human rights” is always used by the US and its allies to justify military action which is needed to support their vested economic interests. This was exactly what happened in Iraq, Libya and now in Syria.
The stark reality is that a stable dictator like Assad, Qadaffi or Saddam Hussein is preferable to an unstable regime split apart by warring factions supported by foreign elements to serve their own economic interests. It’s time the Israeli public opened their eyes and stopped allowing their leadership to feed them fairytales about who the real bad guys in this picture.

So when President Obama says that the US is required to initiate a bombing campaign against Assad, because “Our ideals and principles, as well as our national security, are at stake in Syria” ask yourself whether it is possible that he is lying- and that the flow of natural gas by his major allies is what really concerns him.

Joel Bainerman is a writer on Middle East economic and political affairs.

Published by:  www.cyprus-mail.com