On 28 May Andreas Neocleous & Co LLC presented a conference
on Oil and Gas: Developments and Prospects, at which the principal
speaker was the Minister of Energy, Mr Yiorgos Lakkotrypis. Below
we give a summary of the Minister's presentation.
The Minister gave a comprehensive overview of the latest
developments and prospects in hydrocarbons activity in the
South-East Mediterranean from a Cyprus perspective, informing the
audience that this was inevitably a snapshot, due to the rapid pace
of developments. The Minister set out his vision for Cyprus as an
energy centre within the Eastern Mediterranean, providing
geopolitical stability in a hitherto volatile region, and described
the four pillars of the strategy that had been adopted in order to
achieve this vision, namely:
-
exploration and exploitation of the resources within Cyprus's EEZ;
-
the LNG plant which is being planned for the area of Vasilikos;
-
the establishment of Cyprus as a regional logistics and service center for hydrocarbons activities;
-
the development of Cyprus as a regional hub for liquid fuel.
The Minister then outlined the
potential benefits flowing from recognition as a centre of
excellence in the energy field. Of course, the oil and gas itself
is a substantial benefit in the medium-term, and the creation of an
oil and gas knowledge-based sector should create further export
opportunities in the longer term. In addition, there is an
immediate benefit, in the form of increased opportunities for the
services sector. Two leading international oil services companies
have recently announced their decision to make Cyprus their base
for their activities in the region and this will provide a platform
for longer-term development of the island as a key regional energy
centre, based on the unique combination of advantages offered by
Cyprus's location, its political stability, its high quality
human resources and services and its business-friendly
environment.
The Minister went on to summarise the various operators' plans
for 2014 and 2015 with respect to seismic prospecting and
evaluation and drilling operations, saying that further seismic
prospecting and evaluation has been taking place in Block 12 during
the first half of 2014, and that drilling operations for a second
exploration well will commence later in the year.
The Minister then outlined the government's strategy for
monetising Cyprus's hydrocarbon resources. The preferred option
is by means of an onshore LNG plant, as this offers the maximum
potential benefit due to economies of scale. While current
estimates of reserves might not be adequate to make an onshore LNG
plant viable, the Minister was hopeful that further gas supplies
would be secured, either from Cyprus or elsewhere, to ensure
viability. If this proved not to be achievable a floating unit or a
pipeline to Egypt would provide an alternative, though less
optimal, solution.
The Minister also touched upon the relevance of EU energy policy in
the matter. The EU accepts that it has a real and pressing need to
diversify both its energy sources and energy routes in order to
reduce the risks that currently arise from its dependency on other
countries. The establishment of alternative routes through the
Eastern Mediterranean provides a means to accomplish this.
In the conclusion to his presentation the Minister informed the
audience that the government's immediate attention would be
focused on bringing the existing licences to production rather than
undertaking a third licensing round. The Ministry has succeeded in
attracting substantial talent in order to assist in the evaluation
and implementation of projects. Nevertheless, the government is
keen to cooperate with other countries in the region and prepared
to act as an intermediary if this will expedite progress.
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