Professional Documents
Culture Documents
Antoniadis Stelios
Eleftheriadis Leonidas
Pitatzis Thanos
Trevezas Simon
Supervisor: N. Kontinakis
January 2014
Table of Contents
1.
Introduction ................................................................................................................. 3
2.
Conclusion................................................................................................................. 12
References ........................................................................................................................ 14
1. Introduction
Cyprus is the third largest island country and a member of the European Union1. It is
located in the Eastern Mediterranean in a geostrategic position because it is Europes last
frontier and a crossroad between Europe, Asia and Africa. Since 1974 Turkeys invasion,
the island is divided into Republic of Cyprus and the Turkish Kibris Cumhuriyeti2.
Despite the fact of this unique situation, Cyprus government has managed to overcome
the political problems and to develop a strong economy with an average annual growth
rate of 0,3%3. The latest financial achievement was the adoption of Euro as a national
currency in 2008. Unfortunately, in 2012, the island was affected by the Euro zone
financial and banking crisis and forced to proceed in immediate structural changes.
According to recent information Cyprus has been a tax heaven country for lot of
businesses but beside that, tourism and shipping industry has been a valuable economic
factor for the overall economy4. Nowadays, the government puts effort in gaining
revenues on development of their promising fossil fuel resources. In 1982, Cyprus signed
the UN Convention on the Law of the Sea which gave them the right of establishing and
determining an Economic Exclusive Zone. Generally, this zone gives the opportunity to
every state to expand to a distance of 200 nautical miles out of its coastal baseline, thus
to legally explore the continental shelf5. Cyprus through the EEZ, has managed to change
the local situation and has turned the wider landscape to its advantage by exploiting its
mineral wealth in a geostrategic manner. This is sufficient enough to promote the Greek
EEZ to follow their example6.
Specifically, significant quantities of natural gas have been discovered on the islands
territorial sea. Research for hydrocarbon resources began in 1938, during British
occupation, by Iraq Petroleum Company Ltd and continued also by other companies such
as Oil Prospectors Ltd (1947), Forest Oil Corporation (1957), Delta Exploration (1970),
Sefel Geophysical Ltd (1975) and Soviet Science Academy (1985). The main purpose
was to evaluate and analyze the seabed view and produce seismographic and geological
research. The outcome was impressive mostly on the north side and promising on the
south. Moreover, the historical information concerning the geological research has
revealed that Cyprus is placed among two areas (basins) which have produced already
tremendous amounts of oil and gas for Egypt and Israel7.
Source: http://www.hitandrun.gr/steit-ntipartment-ipa-anagnorizoun-dikeoma-tis-kiprougia-tin-aoz/
the area to over 1076 bcm. Future explorations may raise the gas reserves in the short
term9.
According to the International Energy Agency (IEA), prospects for increasing production
continue to be hampered by political instability. Long-standing historical grievances
across the Eastern Mediterranean, such as the Israeli-Arab conflict, cast a long shadow
over the project. Regional political rivalries are made more acute by political disputes
regarding the validity of maritime Exclusive Economic Zones (EEZ) boundaries10.
Past and present rivalries in the Middle East are hindering the exploration and production
of gas in the East Mediterranean, causing divisions within the countries and meanwhile,
the Levant Basin gas potential under the Mediterranean remains unexploited. Israel,
Cyprus and Turkey have recently shown that economic considerations are beginning to
prevail over security and political concerns in the reshaping of global and regional
alliances. In addition in this dispute, timing is a key element. Starting in 2018-20,
Australia, Mozambique, the United States, Canada and Russia are all planning to export
gas to Asia. If exploration is delayed by the ongoing disputes, Israel and Cyprus the
most advanced countries when it comes to gas exploration will be forced to sell their
gas at a lower price9.
Source: http://www.isn.ethz.ch/Digital-Library/Articles/Detail/?id=165423
3.1
Block 9 timeline
In September 2014, the Saipem 10000 drillship has started drilling operations to
Onasagoras Field. The Cypriot Energy Ministry has reported that commercially
exploitable natural gas reserves were not found by the ENI-KOGAS partnership at the
first exploratory drill at the offshore Onasagoras field, located in Block 9 of the Cyprus
exclusive economic zone which brought disappointment in Cyprus. According to an
official announcement, the joint venture will complete drilling within the next few days
and move on to the Amathusa field, also located in block 9. Drillship Sapiem 10000 will
continue as normal, the exploration program that started last September, the ministry
said18.
January 2015, The Saipem 10000 drillship will start drilling operations to Amathusa
Field.
Floating LNG
10
Source: http://www.defencegreece.com/index.php/2012/04/southeastern-mediterraneanhydrocarbons-a-new-energy-corridor-for-the-eu/
11
5. Conclusion
Cyprus enacted the EEZ since 2004 and has achieved three agreements with Egypt,
Lebanon & Israel. There is still a missing agreement with Greece. Cyprus with the 2
nd
lending round managed to attract 15 companies-ventures and these are candidates for
nine of the 12 blocks. The block 12 with the famous Aphrodite deposit is at the limit of
the EEZ of Cyprus and the EEZ of Israel9. The company NOBLE has signed different
contracts with Cyprus and Israel for this deposit.
Cyprus managed to reinforce substantially by gathering foreign countries in its EEZ. The
Italian ENI and the Korean KOGAS came for blocks 2 & 3, the French-Russian
consortium TOTAL & E&P Activities, also the two Russian NOVATEC & GP (Global
Resources) for the block 9 and the French TOTAL company for the block 11. NOBLE
company with the Aphrodite deposit will turn Cyprus into exporting country for gas, that
is why accomplished new drilling process in 2013. They also consider Cyprus and Israel
for Onshore LNG- FLNG in Tamar & Leviathan deposits22. Based on the above
mentioned, the block 10 and 11 are in touch with 12 which also touches the block 9
complex (the blocks 9-2-3), so there is a sequence 10-11-12-9-2-3 which osculates on all
EEZ in which Cyprus has signed agreements17.
Because of the EEZ, Cyprus already has won 23 million Euros for seismic surveys, 150
million Euros for the bonus signature on blocks 2, 3, & 9 from the consortium of Italy
and Korea and now 12 million Euros for each block by the French company, meaning 24
million for blocks 10 & 11. In addition, there is a written report for the 700m drilling
that TOTAL is going to do, so the research is not just about the natural gas but for oil
too, which makes it even easier for Cyprus to succeed an economic recovery. Also, the
percentage of Cyprus in earnings after the recoverable expenses would be closed up to
70%. Moreover, due to the contract the companies should pay signature bonus, which
means that Cyprus will have immediate revenue with just a signature.
Finally, Cyprus through the EEZ & its hydrocarbons has managed to change the local
situation and has turned the wider landscape to its advantage by exploiting its mineral
wealth in a geostrategic manner23. Cyprus has resisted the Annan plan that would have
removed every right to establish EEZ and joined the EU. Thanks to their political vigour,
12
they established EEZ and isolated Turkish threats. This political advantage in comparison
with the international companys ability to influence the political issues, Cyprus has a
great opportunity to resolve their dispute with Turkish Cypriot side.
13
References
1.
BBC
News
Cyprus
country
profile.
http://news.bbc.co.uk/2/hi/europe/country_profiles/1016541.stm.
Available
at:
Accessed
BBC
News
Cyprus
profile
Timeline.
Available
at:
4.
Cyprus one year on: Injured island | The Economist. Available at:
http://www.economist.com/news/finance-and-economics/21598649-bail-outworking-bail-isnt-injured-island. Accessed December 29, 2014.
5.
6.
- . . Available at:
http://www.lygeros.org/articles?n=7977&l=gr. Accessed December 22, 2014.
7.
:
-
Hit&Run.
Available
at:
http://www.hitandrun.gr/steit-ntipartment-ipa-
9.
14
10.
Report I, Options PD. Interim Report for the Study Natural Gas Monetization
Pathways for Cyprus Economics of Project Development Options.; 2013.
11.
TABLE
OF
CONTENTS
EXECUTIVE
SUMMARY
...................................................................................................... i. 2012;(April).
12.
Offshore
Cyprus.
Available
at:
http://www.mcit.gov.cy/mcit/mcit.nsf/All/F35CAD9F4226E424C225771B00546F
25/$file/presentation_OTC 2011.pdf. Accessed December 30, 2014.
13.
Accessed
15.
16.
Scaroni P. Eni 2014 - 2017 Strategic Plan Growing cash generation underpins
shareholder returns. 2014:2014-2016.
17.
Directive EC, Gazette O, Journal O, Union E. YPRUS; Drilling for natural gas
reserves. 2009:1-4.
18.
Dissapointment from the latest drilling in the East Mediterreanean. Available at:
http://www.naturalgaseurope.com/onasagoras-eni-kogas-cyprus-block-9. Accessed
December 30, 2014.
15
19.
Cyprus Expat | Blog: French Oil Company Total Expects To Start Drilling In
Cyprus
EEZ
In
2015.
Available
at:
Report MT. Modelling the demand and supply of natural gas from Cyprus and
Israel. 2012.
21.
hydrocarbon. 2011;(November).
22.
Basin L. Overview of oil and natural gas in the Eastern Mediterranean region
Geology. 2013;2013.
23.
16