Europe has hopes Eastern Mediterranean gas reserves can help to diversify its supply sources, as well as easing Cyprus’s economic pain and potentially playing a role in healing the rift between the northern and southern parts of the island.

Charles Ellinas, executive chairman of the Cyprus National Hydrocarbons Company, said authorities would also push ahead with plans to develop a liquefaction plant to handle exports expected from 2020.

But gas from the region also comes with Middle East complications since the fields are split with Israel and Lebanon, two countries technically at war, and Turkey objects to ethnically split Cyprus tapping offshore reserves.

“I am very confident that Cyprus can provide Europe with 30 to 40% of its additional gas needs by 2025,” Ellinas told Reuters as part of a series of interviews on the gas market.

Europe’s gas demand is slightly below 500mn cubic metres a year, and Ellinas estimated the increase in demand by then to be around 100bn cubic metres (bcm) a year, although many analysts say demand will grow much more slowly.

The US Geological Survey estimates a mean 122tn cubic feet (3.5tn cubic metres) of recoverable gas lie in the eastern Mediterranean basin, as well as 1.7bn barrels of recoverable oil.

Much of it lies trapped beneath the sea bed between Cyprus, Israel and Lebanon, including two vast gas fields off Israel which are some the largest discovered in the past decade.

So far an estimated 200bcm of natural gas worth $80bn at current prices have been discovered in the Aphrodite gas field in Cypriot waters, but research suggests that developing the field would require large amounts of upfront investment into a project that may not deliver high returns.

Analysts say gas prices could fall after 2015 when a wave of new supplies become available in the US, Australia and Africa.

Consultants estimate the first phase of the LNG facility including infrastructure and one delivery chain will cost $6bn. One option under consideration for funding the project was to use the LNG sales agreements as collateral.

“Given that the ownership of gas is, roughly speaking, two-thirds Cyprus’s and one third to oil companies, these LNG sales agreements are worth a large amount of money which can provide security for loans,” Ellinas said.

Ellinas said there was a chance developing the gas could lead Turkey and Cyprus to bridge their 40-year differences.

“One of the reasons Turkey has been putting so much pressure on everybody is because of their own needs (for gas),” he said.

The gas windfall is one economic positive for Cyprus, where the terms of an EU and International Monetary Fund bailout will see the island’s €17.5bn ($22.51bn) economy shrink by more than 8% this year.

Despite its close business ties with Cyprus in other sectors, Russia does not have any involvement in the island’s attempts to develop its offshore energy sources.

“The Eastern Mediterranean is a secure, independent supply corridor. It’s probably best if Russia is not involved,” Ellinas said when asked about Russian involvement.

Cyprus has signed production sharing contracts with US based Noble Energy, France’s Total, Italy’s ENI and South Korea’s KoGas.

Ellinas said Noble was scheduled to start appraisal drilling in June to verify initial findings of between 5 and 8tn cubic feet (tcf) of gas. Total was scheduled to start an exploratory drill in 2014, and ENI by 2015 or possibly earlier.

“I have seen the estimates of ENI and Total about how much gas there is in their blocks and it is quite significant,” he said. Asked if the estimates were on a par with those of Noble, he said: “The short answer is yes.”

Ellinas, who previously held senior positions at energy firm Mott MacDonald, said the construction of a pipeline to channel the gas to markets was impractical because of sea depths, but said that could not be ruled out in the future.

For now, the island will move ahead with plans to construct an LNG terminal, which will liquefy gas and ship it.

The terminal, which is expected to be built at Vassilikos, on the island’s south, could handle gas fom Israel and Lebanon as well as Cyprus, he said.

Published by:  www.gulf-times.com

Nicosia, Apr 23 (CNA) — The Cypriot bailout undermines confidence in the financial system, Russian President Vladimir Putin has said.

On April l2 the Euro area Finance Ministers, collectively called the Eurogroup, gave the green light to a €10 billion bailout for Cyprus. The Cypriot package includes losses for uninsured deposits (above €100,000) in Bank of Cyprus, which will absorb the good part of Cyprus` second largest lender, Cyprus Popular Bank, which will be wound down which entails that uninsured depositors in the bank may take losses up to 80%.

Published by: www.cna.org.cy

“There are still unsolved issues about Cyprus’ offshore and Russiatakes notice of them,” said Novak during a press meeting after the 12th meeting of the Turkish-Russian Joint Economic Commission in Antalya on April 20.

Russia has close cooperation with Turkey, Novak said. “We would never think to harm business principles considering our friendly relations.” However, Novak said the Samsun-Ceyhan crude pipeline project was in an unclear state, noting that if the projects became fruitful, they could seek a new partner instead of former partner Italian Eni.

Turkey decided to suspend energy projects with Italian giant Eni in retaliation for the company’s involvement in oil and gas drilling off the coast of Greek Cyprus, Energy Minister Taner Yıldız said at the end of March.

Eni has a share in the Samsun-Ceyhan crude pipeline, which is slated to span Turkey from the Black Sea province of Samsun to the oil hub of Ceyhan in the south. Eni, Russia’s Rosneft and Transneft and Turkey’s Çalık are all partners in the project.

Yıldız said that Turkey could consider canceling the Samsun-Ceyhan deal, adding that they could find alternatives to the Samsun-Ceyhan deal if it was canceled. Yıldız said Russia’s Gazprom and Rosneft would not join in projects in Greek Cyprus due to the strategic cooperation agreement between Turkey and Russia.

Trade volume target not ambitious

The aim to reach a trade volume between Russia and Turkey worth of $100 billion is “not that ambitious,” Russian Energy Minister Alexander Novak said during a press conference after the 12th meeting of the Turkish-Russian Joint Economic Commission inAntalya April 20.

The current trade volume between both countries is approximately $34 billion. “It [$100 billion] means that we would have to triple our trade volume. If we look to the aspects of our trade the primary import materials are energy resources and metals, at around 87 percent,” he said.

Novak emphasized that priority should be given to diversifying the traded goods. “It is especially important to realize new project in sectors where mostly new technologies are used, such as automotives, the nautical industry, and the machinery sector. Logistical and transportation centers are of great importance in this matter,” Novak said.

For his part, Turkish Energy Minister Taner Yıldız stressed that the trade potential between the two countries was huge. “There are nearly 500 Russian companies operating in Turkey, while Turkish construction companies have $50 billion worth of transactions in Russia,” Yıldız said.

Akkuyu nuclear plant to be completed ‘on time’

At the end of the press conference, the ministers held a video conference with Turkish students studying at the National Research Nuclear University in Moscow, who are expected to operate Turkey’s first nuclear plant built by a Turkish-Russian consortium. The students will mark history when they start working in Turkey, the Russian minister said.

Meanwhile, the director of the Akkuyu nuclear plant, Alexander Superfim, assured that work on the plant would be finished on time. It is currently scheduled to be completed in 2019.

Published by:  www.hurriyetdailynews.com