Cyprus has significant natural gas resources that are coveted, so the island seems to become an opportunity.
A major discovery
Cyprus offers the prospect of a strategic crossing point for Israeli natural gas that feeds the European network. Once condensed to a liquid state, the gas is exported via ships instead of through a pipeline. This option is less costly and more flexible since ships decide which waterways they wish to use.
The energy company Energean, which is focused on the exploration and production of hydrocarbons, is sponsoring the project. In order to evaluate its feasibility, the Cypriot minister, Natasa Pilides, is mobilizing the members of her government. Negotiations are still ongoing.
However, the speech of Mrs. Pilides suggests that the island could be equipped with gas infrastructure, it says:
“It’s also a good opportunity for us to have infrastructure close to home, so if we want to use it for our own sources, that will be an additional option. It’s certainly worth discussing with our licensees.”
Indeed, no less than 13 blocks potentially very rich in natural gas make up its exclusive economic zone. TotalEnergies and Eni, reveal the discovery of a gas column during the drilling of the Zeus-1 well, in the “Block 6”, located 162 km southwest of the coast.
Gas resources to exploit
ExxonMobil and its partner Qatar Petroleum as well as the Total/Eni consortium would hold more than half of the blocks on the island. Together, the companies are working to gather enough data to estimate the amount of gas present and decide on an export strategy. In addition, the Eni/Total alliance will soon announce plans to accelerate the exploration and development of Block 6.
The discovery of new resources only reinforces the very promising character of the island. According to the Prime Minister, “12 to 15 trillion cubic feet” of gas would be discovered. In 2011, the 4.25 trillion cubic foot Aphrodite gas field was the subject of a dispute in the Levant Basin.
Cyprus and Israel managed to resolve their differences. The island granted the operating license to a consortium comprising the American major Chevron, the British Shell and the Israeli Delek. The operator group will present an initial development plan for this project by the end of the year.
Thus, to process the gas, Chevron would use Egyptian processing plants. The company will also build new pipelines to export gas to Egypt in a sustainable manner. The Eastern Mediterranean would decide to increase its energy production capacity since cooperation between Israel and the EU is inevitable.
The organization “East Mediterranean Gas Forum”, believes that the region has enough natural gas volume. Indeed, experts from Greece, Italy, Cyprus and France estimate that exports are possible until 2050. However, as part of its energy transition, Cyprus needs to solve the lack of surface area for the installation of solar parks.
However, the outlook is positive for 2023 as the EU wants to increase gas stocks to 90% by next November. The EU and the UK are expected to import 164 bcm of LNG in 2023. This represents 13 billion m3 more than in 2022.
Potentially increasing demand
The EU wants to secure its energy supplies. So, before the beginning of the winter, it announced a plan to reduce its gas demand as part of RePowerEU. It wanted to end the dependence of member countries on Russian fossil fuels.
To this end, it set a reduction in gas consumption of 15% from August 2022 to March 2023 compared to the average of the previous five years. In November, it appears that the fall exceeds expectations. However, six states have not yet reached the 15% mark.
In addition, consumption by the Maltese and Slovaks rose by 7.1% and 2.6% respectively. Weather conditions will play a major role in European gas consumption. Stocks could drop to only 73% by winter 2023/2024 meaning more imports.