The Republic of Cyprus has started negotiations with three energy companies to develop a liquefied natural gas (LNG) terminal at an estimated initial cost of $6 billion.
Cyprus today signed a Memorandum of Understanding (MoU) with US-based Noble Energy and Israel’s Delek and Avner to negotiate the construction of an LNG terminal in Vassilikos Cyprus, where space is available for at least three LNG trains. This MoU is the first in a series of agreements that will be required for the implementation of the Cyprus LNG Project.
During 2011, Noble announced the discovery of the Aphrodite field in Block 12 of offshore Cyprus with a gross mean of 7 feet (tcf). Noble is expected to announce the results of the appraisal drilling in September 2013.
Noble Energy, Delek and Avner are partners in Israeli offshore fields Tamar and Leviathan and in Cyprus’s Block 12. Noble Energy has a 70% working interest in the Aphrodite field offshore Cyprus whilst Delek and subsidiary Avner Oil exploration hold the other 30 percent stake in the gas field off Cyprus’ southern coast, which is estimated to contain 5-8 tcf of gas.
Earlier this year, Cyprus signed additional agreements with French energy giant Total and a partnership of ENI of Italy and South Korea’s Kogas for oil and gas exploration in its waters. Reportedly, Total is also interested in having a stakehold in the LNG facilities to export from Cyprus.
If the quantities expected are confirmed by Noble in September 2013, the construction of the LNG facility at Vasilikos is expected to proceed. The parties objective under the MOU is to reach a final agreement by the end of 2013 to establish a joint special-purpose vehicle which will seek investors for the €7-8 billion LNG plant. “On this basis, it is planned that the first LNG cargo would be delivered from the Vasilikos plant to international markets in late 2019, early 2020,” said an official statement.
“The signing of the memorandum between the Republic of Cyprus and the companies represents the next milestone on the road map for the exploitation of indigenous gas reserves in Cyprus’ exclusive economic zone”, said Cyprus Minister of Energy, Commerce, Industry and Toursim Yiorgos Lakkotrypis. He added that the LNG plant would be the basic and necessary infrastructure which would allow the export of Cypriot natural gas to the European and global markets.
Israel has not been able to find a site to build its own LNG facility. Noble earlier this year announced the Karish discovery offshore Israel, with an estimated gross mean resource size of around 1.8 tcf. With the addition of Karish and the recent increase in resource estimates at Tamar and Leviathan, the total discovered gross mean resources in the Levant Basin by Noble are now estimated to be approximately 38 tcf.
Lebanon has not yet formulated its export policy and is currently finalising the legislation which will allow the launching of the exploration phase. It is expected that Lebanon will begin exploration by 2014.
The proposed LNG terminal in Vassilikos may attract Cyprus` Mediterranean neighbours, as offering a reliable and flexible routing for export, making Cyprus regional energy hub.
If you have a query or wish to receive further information, please contact us direct at [email protected]
Theodorou Law Firm is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law.
