By Constantinos Hadjistassou*, PhD
The Minister of Commerce Mr Sylikiotis has today (Wednesday, 06.02.13) signed an agreement with Total SA granting the company the exclusive exploration rights for blocks 10 and 11 in the Cypriot Exclusive Economic Zone (EEZ). The solemn ceremony held at the Ministry of Commerce today marked the completion of the second licensing round at least for the current Government which leaves office in less than two weeks time. Interest in Cyprus’s highly promising offshore hydrocarbons frontier attracted 15 bits from a total of 29 companies including Italian ENI, Australian Woodside, South Korean KOGAS and a host of other players.
On January 24th blocks 2, 3 and 9 were awarded to the ENI-KOGAS consortium. Official sources revealed that Total will commence exploratory drilling for oil within the next three years. Other than one attempt in the Israeli EEZ which terminated immaturely without reaching the desired geological formations, no drilling platform has yet to complete an exploration well for oil in the Easter Med. At times when the Brent benchmark index remains at $115 per barrel, an oil discovery will be a game-changer for Cyprus and the region.
The agreement with Total is accompanied by a 24m euros signature bonus. Overall the Government has collected a total of 174m euros. Total prides itself of being a “supermajor” independent oil & gas company with business operations stretching across 130 countries. If oil is discovered the prospects for major financial and other benefits for Cyprus are expected to be substantial and felt much shortly than compared to the existing natural gas discovery of about 200 billion cubic metres (7 tcf). In light for the dire economic situation with have compelled Cyprus to seek financial assistance from the Troika, hydrocarbons constitute a bright hope.
Already several companies engaged in oil & gas related services have opened offices in Cyprus and more are expected to express interest. Despite the economic situation Cyprus remains a popular business destination with a highly educated workforce, a modern legal system and communications network served by a strategic location.
Cyprus as a signatory to the UN Convention of the Law of the Seas (UNCLOS) and an EU Member State conforms to the international law. In breach of the international law Turkey has recently threatened Cyprus that it will conduct seismic surveys in the Cypriot EEZ. Turkey which depends heavily on Iranian oil and Russian gas has yet to realise the risks associated with security of supply. Provided political and diplomatic obstacles are overcome, Turkey will be the first country to tap on Cyprus’s oil & gas resources.
*researcher at the University of Cyprus specialising on hydrocarbons and low-carbon energy technologies. Website: www.energysequel.com
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