Cyprus Gas News keep you up to date with all news about Cyprus Gas and Oil reserves.

LNG talks

Admin — Wed, 12 Dec 2012 18:33:11 +0000

NICOSIA – Cyprus took a step towards establishing a new LNG terminal when Dutch giant Bopak Oil Emea was selected buy the government as a strategic associate.
Now talks will proceed with regard to the building of the terminal at Vassiliko and if they are successful, the matter will go to the Cabinet for approval.
The government spokesman said that there was no target date but thy wanted the project to go ahead as quickly as possible.

Published by: www.incyprus.com.cy

House stormed

Admin — Tue, 11 Dec 2012 12:53:59 +0000

NICOSIA – Holders of convertible bonds have stormed the House of Representatives.
They forced their way into the building and interrupted a meeting of the House Ethics Committee which was discussing the matter.
The bond holders claim they were misled by the banks into buying the bonds, which have seen their value decimated by the Greek crisis.
They are demanding that MP’s do not agree to a Troika suggestion that the bonds are converted into shares.
Members of the police also demonstrated Tuesday outside the House against Troika demands that a number of their benefits be removed.

Published by: www.incyprus.com.cy

Special report: Cyprus Reserve psychology

Admin — Mon, 10 Dec 2012 20:03:11 +0000

Cyprus is mired in bailout talks yet has massive untapped gas reserves. We ask the experts how the island’s law firms are coping with this complexity

What progress has been made on the natural gas developments over the past six months and how has your firm been addressing this potential new practice area?

Andreas Neocleous, chairman, Andreas Neocleous & Co: Exploratory drilling has revealed a gross natural gas reserve of between 85 and 250 billion cubic metres, with a 60 per cent probability of geological success. If proved, this would put Cyprus among the top 50 countries in the world for gas reserves. The second licensing round, which has been taking place in the past few months, produced bids for four more blocks and negotiations are in progress with preferred bidders. Several disappointed bidders have indicated they are likely to dispute the process.

It is expected to take at least six years before gas is extracted commercially and a great deal of infrastructure, both physical and commercial, will need to be put into place in the meantime.

All this activity will undoubtedly produce great opportunities for law firms and, judging from their announcements, many Cyprus firms have instantly become energy specialists. The energy sector is extremely complex and it takes years to develop the necessary expertise and market presence – it simply cannot be simply bought in. We are therefore partnering with overseas firms that are leaders in the energy sector on a non-exclusive basis, building on our strength in Cyprus and EU law, and organically developing our capacity and expertise.

Marios Hadjigavriel, partner, Antis Triantafyllides & Sons: The oil and gas industry is an area on which our firm has acquired extensive experience and expertise through strong and established international finance and corporate business. Consequently, following the government grant of an exploration licence in 2008 for a particular offshore block, our firm was involved in obtaining the necessary permissions and licences regarding the import, export and use of machinery, and material required for the exploration and extraction of natural gas. We were further involved in negotiations on plans and projects relating to the operations.

In October the government said it would issue four licences for gas exploration in offshore blocks, pending negotiations with the shortlisted companies and consortia. We don’t anticipate the legal work from this development will be routed to local firms directly but will instead be assigned by the international law firms mandated by such companies and consortia. Because of this our firm is focusing on exploiting its existing network with a number of international law firms.

Yiota Kythreotou-Theodorou, partner, Pamboridis: Cyprus’ gas reserves offer an opportunity for development and prosperity, and in the longer term we hope it will become a regional energy centre. But aside from this optimism, if our reserves are as rich as predicted, we will soon be facing significant legal, regulatory and operational and technical challenges. The sheer scope of construction projects, the danger of pollution incidents, the politics of who owns what resources, the arrangements for transporting and exploiting any gas reserves and many other issues require specialist legal advice.

We have recognised the need for high quality, reliable and commercially oriented legal knowledge and expertise, and have been educating our lawyers. Our energy team is able to represent clients in the energy sector, from international oil companies to independent juniors and, potentially, state-owned companies and the government.

Significantly, we have established a relationship with DLA Piper boasting a global energy footprint unmatched by any other firm.

QCyprus is in bailout talks with the Troika. Do you expect the bailout to generate any work for lawyers?

Neocleous: Yes, and for us it already has. We cannot discuss specific assignments due to confidentiality agreements, but we have already advised on substantial potential mergers of financial institutions.

One of the big issues in the negotiations is the extent to which the banks require recapitalisation. That will depend on the extent of their non-performing debt which, in turn, is influenced by the security held for the debt. An independent assessment is in process and a key element is the validity and enforceability of the security.

In due course, when credit institutions are restructured, lenders and borrowers will require extensive legal support in negotiating and documenting the terms.

Alexandros Economou, partner, Chrysses Demetriades & Co: Since we have long held a dominant position in the banking and finance sector we benefited from the increase in capital raisings. We acted for the dealers in the establishment by the Bank of Cyprus of its €5bn (£3bn) covered bond programme and the first two issues thereunder. This was the first covered bond programme in Cyprus. We have since acted for other similar programmes.

As a result of the economic downturn, litigation is on the rise and I also expect a big rise in national restructurings and refinancings.

In the present environment I expect full-service law firms to suffer least or even grow (like our firm), as opposed to law firms that specialise in troubled markets.

Kythreotou-Theodorou: The crisis and the anticipated bailout agreement will bring about big changes – and have already done so in many respects – to the Cyprus business environment as well as the financial and services sector. As a result, some areas of law have seen a substantial increase in the volume of work. To mention but a few, these include debt collection and recovery, bankruptcies and administrations, debt restructuring and employment. In addition, mergers and acquisitions are on the rise and we expect this trend to continue.

At the same time, Cyprus’ banks and the Cyprus Central Bank are carrying out investigations into the causes of the huge exposure to Greek debt, suspect loan transactions and allegations of impropriety and misconduct among high-ranking officers. For this work and any resulting civil law actions, and perhaps even criminal proceedings, they have mandated local law firms, but primarily magic circle firms.

Parallel to this, we expect initiatives designed to attract foreign investment. For example, a new scheme allowing non-EU citizens investing €300,000 in property to acquire residency permits has generated notable interest in China.

QOverall, how would you sum up 2012 for your firm?

Neocleous: The economic situation has created challenges from which the legal sector – and particularly firms that depend on domestic work – has not been immune. But we have escaped most of the adverse effects – activity and revenue have continued to grow. And the softer employment market has allowed us to strengthen our resources by selective recruitment.

We have also had other successes. After extended procrastination by the authorities we finally achieved the modernisation of the Cyprus International Trusts regime. This returns Cyprus to the Premier League of trust jurisdictions and greatly increases its attractiveness as an international finance centre.

The Euro-Mediterranean Alternative Dispute Resolution Centre, a not-for-profit initiative we are also leading, should open its doors in the next few months.

The past year has been challenging but, to paraphrase Socrates, we should remember that there is nothing stable in human affairs, that we should avoid undue depression in adversity and approach our present circumstances as an opportunity to learn from the mistakes of the past.

Hadjigavriel: Taking into account the international financial situation 2012 was a relatively satisfactory year, more or less on the same level as 2011.

Economou: Although investor confidence in Cyprus is muted as a result of the debt crisis that resulted in fewer M&A transactions, our firm has not suffered. On the contrary, at all levels we are much better than 2011. That is because of our foreign clients, most notably from Russia.

Kythreotou-Theodorou: 2012 has been an interesting year and, in many respects, a transitional one. As we enter the ‘Troika era’, the legal sector is adapting to accommodate areas of law showing a significant increase in volume. At the same time we are faced, as lawyers, with the tremendous opportunities that the natural gas developments are creating.

Energy law is pretty much in its infancy and law firms are in a race against time to acquire the expertise and know-how to respond to the needs and demands of this new sector.

In view of all this 2012 has been a busy time for us. The volume of financing, banking transactions and start-ups has been modest (although better than 2011), but we have invested a lot of time in adapting so that we can respond in those areas of law that are prospering and promising, and to place ourselves at the forefront of the profession in matters of energy law.

We are optimistic. Although 2013 will be a testing time for the economy there will also be opportunities for growth for firms that are quick and willing enough to adapt.

Published by: www.thelawyer.com

Gas profits should go to repay troika, says Antoniadou

Admin — Sat, 08 Dec 2012 10:24:46 +0000

INSTEAD OF leaving the management of Cyprus’ natural gas in the hands of a few, the government should commit its net profits from gas revenues to repaying the troika, said United Democrats leader and presidential candidate Praxoulla Antoniadou.
The former commerce minister argued that this would lift the massive burden placed on the public as a result of the draft memorandum agreed with the island’s international lenders.
Antoniadou pledged to renegotiate the memorandum with the troika if elected and commit net revenues from the natural gas in Block 12 of Cyprus’ exclusive economic zone to repayment of the loan, instead of keeping revenues “in the hands of a few self-appointed managers” of Cyprus’ natural wealth.
“The refusal of the government and opposition to accept supervision of the management of the billions (of euros) that will start flowing within a few years from Block 12 raises questions, especially where this refusal leads to transferring all the burden of repayment on the shoulders of the ordinary and innocent citizen,” she said.
Asked how feasible this was, Antoniadou argued that the troika was “clearly prepared” to remove some of their demands if they could secure repayment of what could potentially be a €17.5 billion loan through gas revenue from Block 12.
However, others were unwilling to do this. “First and foremost, they didn’t want to be subject to any control,” she said, referring to the present government and opposition.
“It is through our insistence that we lumped the greater part of the burden on the shoulders of the workers, the unemployed and pensioners.”
She further argued that lack of supervision in the banking system led Cyprus to where it is today: “We must avoid another sellout that will come from the lack of supervision in the natural gas sector.”
Antoniadou, who was unceremoniously removed from cabinet earlier this year, had a further bone to pick with the present government.
The former commerce minister referred to negotiations underway in March 2012 between the EAC and the European Investment Bank (EIB) for a loan.
Antoniadou had told the EAC to negotiate a one-year extension on the terms of the loan which stipulated that the EAC must start using natural gas for energy production by 2015.
Instead of doing so, the EAC circumvented the commerce minister, and on the orders of then finance minister Kikis Kazamias, signed the loan agreement including the term for utilising natural gas by 2015.
“The result was that the Republic of Cyprus committed to something it could not deliver,” she said.
The presidential candidate suggested the government appeared more keen to import natural gas than speed up the process for utilising its own gas.

Published by: www.cyprus-mail.com

State hydrocarbons company law passed

Admin — Sat, 08 Dec 2012 10:23:12 +0000

PARLIAMENT on Thursday night unanimously passed a bill on the establishment and control of the state hydrocarbons company KRETYK.
The bill stipulates that the company’s budget must be submitted to Parliament but would s not require approval.
Under the new law, the House will however have the right to approve the criteria for the appointment of board members.
The state hydrocarbons’ company will be controlled by the Republic’s Auditor-General.
Commerce minister Neoclis Sylikiotis announced in October that the government had established the Cyprus Hydrocarbons Company (KRETYK) with the submission of the company’s statute to the Department of Company Registrar.
The company will, inter alia, engage in the production-sharing contract with Houston-based Noble Energy with regard to the extraction and exploitation of natural gas from Block 12 of Cyprus` Exclusive Economic Zone and engage in consultations with prospective investors concerning the construction of a terminal in Cyprus to liquefy natural gas.
The state will own the majority capital in KRETYK, which will be a private and not a public company and therefore the House will not have to approve its budget as it would have to do in the case of semi-government body.
Under the preliminary bailout deal with the troika, Cyprus asked to prepare and adopt legal steps enabling the establishment of a resource fund, which should receive and manage the public revenues of offshore gas exploitation. As a first step, Cyprus should submit its draft legal framework for review by the programme partners taking into account international best practices, as well as a detailed action plan by the second quarter of 2013, the troika memorandum says.
It also said Cyprus must undertake a study on the financial aspects of the transition towards the exploitation, use and export of natural gas, as a first step in the formulation of a comprehensive development plan for the rearrangement of the Cypriot energy sector.
This plan should include a projection for the roll-out of the infrastructure, details on the financing and ownership of the related physical assets; an assessment of any major planning and financing bottlenecks and risks; an estimate of the revenue stream over time, and the establishment of appropriate governance structures.
The plan should also take into account the current uncertainty over the actual size of domestic, offshore, commercially-viable natural gas fields and possible changes in international gas prices and demand, and should be based on alternative world energy scenarios from an internationally reputed organisation. A first outline of this development plan would also be submitted in the second quarter of 2012, according to the memo.
The troika also wants Cyprus to provide an outline of the regulatory regime (CERA) and market organisation, which would be conducive to the introduction and proper functioning of open, transparent, competitive energy markets, taking into account the size of the Cypriot economy, the integration of Cyprus’ energy system into regional markets.
The outline should include the potential to set-up wholesale markets for gas and electricity, of which the latter should be open to non-producing traders; the freedom for customers to make an effective choice of supplier; full unbundling of gas suppliers and customers, in particular electricity companies; and a single sales organisation for the off-shore gas supply

Published by: www.cyprus-mail.com

Cyprus-Greece pipeline ‘not viable’

Admin — Fri, 07 Dec 2012 12:20:43 +0000

PIPING gas from Cyprus to Greece and then onto European markers would not be commercially viable, the consensus seemed to be yesterday among businesspeople, financiers and analysts at the 2nd Cyprus Energy Forum in Nicosia.
Anthony Livanios, CEO of Energy Stream CMG Gmb, an international advisory firm based in Frankfurt and Athens, argued that the cons of such a pipeline far outweighed the pros.
In addition to the actual cost of construction being prohibitive, he said, the pipeline option would require long-term supply contracts with the price formula linked to oil. It would also limit the export markets.
By contrast, trading LNG by ship is more flexible, since the gas could be exported to a variety of markets (Europe as well as Asia), and selling on the spot market would yield more competitive prices.
Livanios said land-based LNG was the best way forward for Cyprus, whether the island chose to go it alone or were it to partner up with Israel.
And Solon Kassinis, head of the Energy Service, said the government was simply covering all the bases when exploring the Cyprus-Greece pipeline option, in order to discover to what extent such a project could be funded by the EU. He seemed to hint that this idea has since been all but abandoned.
A joint Cypriot-Israeli LNG project was another key theme during the forum. Kassinis said he and other officials have been talking with their Israeli counterparts about the possibility of an LNG facility on the island to export gas from Cyprus’ reserves and from Israel’s Leviathan field.
Leviathan is expected to come online in 2016.
With that in mind, said Kassinis, authorities here are planning to allocate land that would host an LNG facility with up to three trains, with a total capacity of up to 15 million tones a year.
A typical LNG train – a plant’s liquefaction and purification facilities – has a capacity of some 5 million tonnes a year.
“We envisage having more than 60 trillion cubic feet,” Kassinis said of the estimated total gas reserves in Cyprus’ Exclusive Economic Zone.
Speaking to reporters on the sidelines of the event, the energy chief was asked to comment on recent news that Australia’s Woodside Petroleum would be buying a 30 per cent stake in the Leviathan project for around $1.5 billion (€1.1 billion).
With the island facing a massive debt following an expected EU bailout, Kassinis was asked whether the government could ‘sell’ its stake in offshore Block 12.
The official said that was hypothetically possible, but stressed that it was more important to bring in a strategic investor with experience (such as Woodside) rather than – for the sake of a fast cash injection – selling the rights to a ‘sleeping partner’ who would then have no participation in exploiting the field.

Published by: www.cyprus-mail.com

Greek natural gas reserves could reach 427 bln euros according to Deutsche Bank report

Admin — Thu, 06 Dec 2012 11:14:40 +0000

Undersea natural gas reserves south of Crete could reach an estimated value of up to at 427 billion euros, according to a Deutsche Bank report published in November .

The German lender’s report notes that the Greek government has commissioned preliminary seismology studies, with initial results expected in mid 2013.

The report, however, also noted that the scale and evaluation of the natural gas reserves have yet to be verified and have so far been based on gas finds in the Levantine Basin in the Eastern Mediterranean, a sea area between Cyprus, Turkey, Syria, Israel, Egypt and Lebanon.

According to the report, revenues stemming from the exploitation of the natural gas reserves could be expected in no fewer than 8 to 10 years.

Published by: www.ekathimerini.com

Noble to sell 10pct of its stake in the Leviathan

Admin — Tue, 04 Dec 2012 11:44:39 +0000

POLITICIANS here found new grounds to bicker yesterday after news that Houston-based Noble Energy agreed to sell 10 per cent of its stake in Israel’s Leviathan gas project.

Noble announced on Sunday that the partners in the Leviathan Project have agreed in principle on a proposal to sell a 30 per cent working interest in the offshore Leviathan licences to Australia’s Woodside Energy Ltd.

Under the proposal, the Delek Group will sell 15 per cent of the rights in the licences for $1.281 billion, Noble Energy 9.66 per cent of the rights for $802 million, and the remaining partner Ratio, 5 per cent of the rights for $417 million.

The Leviathan project has an estimated 17 trillion cubic feet (tcf) of discovered resources and is currently being appraised.

Under the terms of the deal, Noble said it would receive cash payments totalling $464 million. (€357 million).

In addition, Noble Energy would receive a share of Woodside’s annual LNG revenue above certain price parameters, subject to a $322 million cap over the life of the project. The company would also be carried for up to $16 million in the drilling of a Mesozoic oil exploration well on the Leviathan licenses. Including the potential revenue sharing amounts and drilling carry, the implied price for Noble Energy’s interest being sold is $802 million, the company said.

Woodside joined a group earlier this year that bid on gas exploration rights off Cyprus. Its offer for Block 9 was not picked.

Using Noble’s announcement as ammunition, DISY’s Averof Neophytou took a pot shot at presidential candidate Yiorgos Lillikas on the latter’s proposal to use Cyprus’ natural gas reserves as collateral.

Lillikas has been advocating pre-selling the rights to the Cypriot offshore blocks in a bid to raise cash; in this way, he argues, the island would have no need for a bailout.

Cyprus’ gas reserves are yet to be proved.

Neophytou said the numbers cited by Noble suggest its contract in the Leviathan project is valued at $8.3 billion ($802 million times ten), or €6.4 billion. Given that the gas reserves in Cyprus’ Block 12 prospect are estimated to be about 2.5 times less than Leviathan’s, this would indicate Noble’s interest in Block 12 would be worth around €2.6 billion (€6.4 billion divided by 2.5).

That’s a far cry from Lillikas’ recent claim that Block 12 alone is worth some €80 billion, Neophytou said.

Moreover, pre-selling the rights to gas prospects now would necessarily mean selling at a discounted price, he added.

All this showed how Lillikas’ proposal was unfeasible and unrealistic, Neophytou said, pointing out that the gas reserves would not be enough to avoid a bailout.

Hitting back yesterday, Lillikas’ said his proposal had been endorsed by “independent economists.”

He went on to quote energy chief Solon Kassinis – widely recognised as an authority on the subject – as saying that Cyprus could stand to make as much as €600 billion from all the gas prospects.

“We understand Mr. Neophytou’s anxiety; he is worried lest there could be a different way out other than his beloved memorandum,” a statement issued by Lillikas’ election staff said, referring to the troika bailout.

Lillikas said Neophytou’s boss and rival presidential candidate Nikos Anastasiades “had been blackmailing us into signing the memorandum here and now, even before we knew the terms.”

Published by: www.cyprus-mail.com

Cypriot Speaker Arrives in Beirut as Berri Hopes Tenders Will be Issued to Begin Oil, Gas Exploration

Admin — Mon, 03 Dec 2012 15:31:40 +0000

Speaker Nabih Berri emphasized on Monday that Lebanon and Cyprus have no problems over the offshore oil and gas wealth in the Mediterranean.

He said after holding talks with visiting Cypriot Speaker Yiannakis Omirou: “I hope that tenders would be issued before the end of the year to begin oil and gas exploration.”

He stressed that Lebanon only has quarrels with Israel over this issue.

The two officials also stressed the importance of bolstering cooperation between the two countries, with Berri reiterating Lebanon’s readiness to provide Cyprus with potable water.

Berri had visited Cyprus in February to tackle cooperation between Lebanon and the island state and the offshore oil and gas.

For his part, Omirou said: “We must work on exerting efforts to bolster ties between Cyprus and Lebanon on all levels.”

“Both countries strive to achieve the same values of freedom and justice. They both advocate international law and resolving problems based on it,” he added during a joint press conference with Berri at Ain el-Tineh.

“We are obligated to cooperate to benefit from the natural resources, such as gas and potable water,” remarked the Cypriot speaker.

Omirou arrived in Beirut on Monday for talks with senior officials aimed at improving relations between the two countries, the state-run National News Agency reported.

“Cyprus and Lebanon are friendly countries and have excellent relations,” he said upon his arrival at Rafik Hariri International Airport.

The two countries face similar problems and “efforts should be exerted to improve ties,” he said.

NNA said over the weekend that the talks between Omirou and the Lebanese officials will highlight ways to develop parliamentary cooperation between the two countries.

He met with President Michel Suleiman, Prime Minister Najib Miqati, and Foreign Minister Adnan Mansour on Monday. He is also expected to hold talks with several religious officials, including Maronite Patriarch Beshara al-Rahi on Monday.

He is also scheduled to hold talks with Progressive Socialist Party leader Walid Jumblat on the first day of his three-day visit to Beirut.

Lebanon and Israel are bickering over a zone that consists of about 854 square kilometers and suspected energy reserves there could generate billions of dollars.

The cabinet approved in September the proposed borders of Lebanon’s Exclusive Economic Zone in the Mediterranean.

In early November, the cabinet approved the appointment of the six members of the petroleum authority and in June, Lebanon was able to restore 530 square kilometers of a maritime zone that it considers it to be within its zone.

Lebanon has been slow to exploit its maritime resources compared with other eastern Mediterranean countries. Israel, Cyprus and Turkey are all much more advanced in drilling for oil and gas.

Published by: www.naharnet.com

MoU with troika released to political parties, leaked to media

Admin — Sat, 01 Dec 2012 09:50:59 +0000

THE TROIKA has given the green light for the Memorandum of Understanding with the Cyprus government to be released to the political parties. The full text of the ‘Memorandum of Understanding on Specific Economic Policy Conditionality’ is attached as a PDF.

Cyprus MoU PDF

Published by: www.cyprus-mail.com