Cyprus and Egypt Committed to Maintaining Energy Ties

Cyprus President Nicos Anastasiades met Egypt’s President Abdel Fattah el-Sisi in New York on Monday. The two leaders discussed regional cooperation on the sidelines of the UN General Assembly. Energy was an important item on the agenda following ENI’s huge discovery in Egypt’s Exclusive Economic Zone. Earlier this month, the Italian company announced it had discovered a natural gas field estimated to hold up to 30 Trillion Cubic Feet (Tcf) of natural gas in Egypt’s waters. The Zohr field is located in the Shorouk Block within Egypt’s maritime zone, only a few kilometers away from Cyprus’ Block 11, licensed to Frances’ TOTAL. ENI has also explored Cypriot waters for hydrocarbon but its two attempts to encounter exploitable amounts of natural gas in Block 9 of Cyprus’ EEZ were unsuccessful.

The two leaders stressed on the need to strengthen energy security to protect the region’s hydrocarbon resources. The two countries have been engaged in talks to export natural gas from Cyprus’ Aphrodite field, discovered by Texan Noble Energy in 2011, to Egypt’s export terminals at Damietta and Idku, operated respectively by Union Fenosa and BG. Egypt has been suffering from energy shortages due to a flat production, a rising domestic consumption and export obligations. The Zohr field will likely improve Egypt’s energy future, but the country may still have an appetite to import gas from neighbouring Cyprus and Israel as it moves ahead with the development of its indigenous offshore riches. ENI’s discovery has also prompted the Italian company to pursue its exploration activities offshore Cyprus. The proximity of the Zohr field to the Cypriot maritime zone has boosted the confidence of Cypriot officials who have urged ENI to pursue its efforts to find natural gas in Cypriot waters.

Licensed to drill in Blocks 10 and 11 of Cyprus' EEZ, TOTAL has not yet commenced its searches off the island’s coast for failing to identify “drillable prospects”, according to a statement made by the company in January 2015. ENI’s new discovery could prompt the French company to reconsider its presence in Cyprus. The size of the discovery made by ENI is an indication that the Levant region as a whole may be home to considerable amounts of hydrocarbon. ENI is also likely to have a renewed interest in exploring Cypriot waters. Block 11, licensed to TOTAL, may be open for bidding again in February 2016 when TOTAL’s license expires.

Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat