Delek Steps up in Cyprus' Block 12
Units of Delek Group signed an agreement on Monday for increased participation in exploration rights for gas and oil off Cyprus' southern shore.
Delek Drilling and Anver Oil and Gas Exploration, which own majority rights in Israel's nearby Leviathan and Tamar fields, will take a 30 percent interest in exploration being carried out by Noble Energy in Block 12.
In December 2011, Noble said it had discovered gas reserves in Block 12 ranging from 5-8 trillion cubic feet (140-230 billion cubic meters) of gas.
Cypriot Commerce Minister Neoclis Sylikiotis told reporters that the signing provided a "new era of Cyprus-Israeli strategic cooperation which includes economic and political dimensions."
Sylikiotis said the deal paves the way for Cyprus and Israel to pool and export gas reserves after processing them at a facility in Cyprus.
The latest deal move comes less than a week after Cyprus signed an agreement with Total SA to permit exploratory drilling for gas and oil in blocks 10 and 11 located west of the gas field discovery by Noble Energy. Total announced it would conduct a series of 10 exploratory drillings for gas and oil over the next three years.
Several Israeli based companies had been in the running to secure rights to drill for oil and gas in Cyprus' economic waters, with some reports suggesting that one-third of the 15 bidding companies were from Israel, including Alon Natural Gas Exploration, which was involved in the discovery of the Tamar natural gas field off Israel's coast.
Alon has a 25% stake in a consortium of companies that bid for a license to search for and produce offshore natural gas in Cyprus, in blocks 10 and 11. The consortium includes Sigma Exploration, a group of American and Cypriot companies, which holds the remaining shares.
Israel’s ILDC Energy failed in its bid to secure an interest in block 9 which was won by a consortium which includes ENI and KOGAS. The two companies also obtained permits for blocks 2 and 3, for which they paid 150 million euros.
Israeli based Cyprus Opportunity, a publicly traded partnership for gas and oil exploration held by Helman-Aldoby, a sister company of Israel Opportunity, along with the Norwegian company AGR, are still in the bidding for a permit, with no final decision yet taken. Block 8 is believed to be doubtful for hydrocarbon prospects, nevertheless, the two companies applied for the permit in the hopes of geological continuity.
Sylikiotis said that having countries such as France, the United States, Israel and Italy involved in the island's hydrocarbon exploration acted as a "political shield" against Turkish threats.
Charles Ellinas, who heads the newly established Cyprus National Hydrocarbons Company, estimates that Cypriot waters hold at least a total of 60 trillion cubic feet (or the equivalent of 1.7 trillion cubic meters), enough to satisfy domestic consumption for decades - and Cyprus' ambition to become an energy exporter - and EU’s growing demand.
Cyprus is banking on its energy bonanza to rescue it its current debt crisis: Cyprus is currently in rescue loan talks with the EU and IMF, the loans being discussed are equivalent to the country’s GDP of 17 billion euros. Although the bail-out package has been delayed until March due to European finance ministers concerns over the size of the package, the recent development in the Energy sector could play a positive role in facilitating the release of the rescue funds.
According to Ellinas, Cyprus could possibly start exporting its gas as of 2019.