Wednesday, February 21, 2024
 
 

Total eyes EU hydrocarbon exports from Cyprus, Greece

Discovery of Egypt's Zohr opened up the possibility of more discoveries in carbonate formations

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Total is reportedly preparing to make an exploratory marine drilling off Cyprus. The French energy major is also in talks with the Greek government to explore for hydrocarbons in the Ionian Sea, a source at the French Foreign Ministry said. A delegation from Total visited Greece in January and met with representatives of Greece’s Environment and Energy Ministry.

Total, along with Italy’s ENI and US energy giant ExxonMobil was awarded licenses for hydrocarbons exploration by Cyprus in December.

Total reportedly plans to drill in block 11 of Cyprus’ Exclusive Economic Zone, which shares a boundary to the south with the huge Egyptian Zohr natural gas well. Nicosia and Cairo signed a framework agreement last August for the transfer of natural gas discovered by US company Noble Energy via pipeline to Egypt’s liquefaction terminals.

Asked if the massive Zohr deposit, the largest ever field discovered in the eastern Mediterranean, could affect negatively the export of hydrocarbons from Cyprus and Greece, Cyprus Natural Hydrocarbons Company CEO Charles Ellinas told New Europe on January 27 that Zohr is destined for the Egyptian domestic market. Some of it may be exported as liquefied natural gas (LNG). “It has affected Cyprus in that Cyprus was hoping to sell its gas to Egypt both for the domestic market and for liquefaction and export to Europe as LNG. This has now gone away because of commercial factors but also because of Zohr,” Ellinas said.

On the other hand, he added, the discovery of Zohr opened up the possibility of more discoveries in carbonate formations. “Total is drilling mid-2017 in block 11, adjacent to Zohr, and there are reasonable indications for a gas discovery,” he said.

Asked if both Greek and Cyprus hydrocarbons could be jointly exported to Europe and if they do need Israel as well, Ellinas noted that the problem for Cypriot and Israeli gas is commercial. “By the time it reaches Europe, by pipeline or as LNG, it is to expensive to compete with gas prices prevailing in Europe, particularly Russian gas. And these prices will be there for the longer term – at least to 2025,” he said, adding that if gas discoveries are made in Greece they will have a better chance. It is closer to Europe and by then there will be infrastructure in place to transport it.

Government representatives from Italy, Greece, Cyprus and Israel plan to meet in February to discuss a natural gas pipeline from the east Med fields to Greece and Italy, according to a report in Globes, cited by Natural Gas World.

Ellinas told New Europe that at BP’s presentation of the Energy Outlook to 2035 it was clear that with the fast changing energy landscape not all discovered hydrocarbons would be consumed even by 2050.

“This means that increasingly there will be strong competition between producers to capture this more limited market. As a result only cheaper resources will be able to be developed, produced and sold. More costly resources will find it difficult to compete and increasingly run the risk of remaining stranded. Cyprus and Israeli gas runs this risk,” he said.

“We are already observing this with both oil and gas. And this is one of the reasons prices are very likely to remain low for the longer term,” Ellinas said.

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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