Cyprus Declares Third Offshore Round

Cyprus formally declared a third offshore licensing round for hydrocarbon exploration in its exclusive economic zone (EEZ) March 24.

This calls for bids to be submitted by 21 June. It appears that the intention is to award licenses for blocks 6, 8 and 10. The choice of these blocks is based on the results from total re-evaluation of the energy potential of Cyprus EEZ following the discovery of the giant Zohr gas field.

The key criteria to be used in the evaluation of bids and award of licenses are:

a)   The bidder's technical and commercial capabilities and standing;

b)   How the bidder intends to execute out the activities envisaged in the license;

c)   The success fee the bidder proposes to offer;

d)   Any lack of effectiveness or deficiencies exhibited by the bidder in the execution of any previous licenses anywhere in the world.

Award is planned six months following the bid submission deadline, ie 21 December 2016, and will be ratified by the Council of Ministers.

The decision appears to result from a number of meetings the president of Cyprus had during the economic forum in Davos. At the time the government announced potential developments in Cyprus’ EEZ. These meetings included the CEOs of Italy’s Eni and French Total, who confirmed their interest for further exploration in Cyprus EEZ. This was also supported by the US vice-president Joe Biden.

This comes at a time when the price of oil and the oil companies' ability to invest in new exploration are low. However, the discovery of Zohr, has created new interest in the eastern Mediterranean region and it is already attracting new companies. It is also understood that Total is quite interested in taking back Block 10.

The other problem facing Cyprus is the unification of the island, although that is being addressed in talks.

Dr Charles Ellinas  @CharlesEllinas, Nonresident Senior Fellow – Eurasian Energy Futures Initiative - Atlantic Council