Address by Democratic Rally President Mr. Averof Neofytou at the 3rd London Gas & LNG Forum 2016
“The Energy Opportunities and Economic Priorities of Cyprus”
Monday, 26th September 2016, The Rag Army & Navy Club, London, 11:30 a.m.
Dear Honorable Speakers,
Ladies and Gentlemen,
Dear Friends,
I am greatly honored to be addressing the 3rd London Gas & LNG Forum amongst such esteemed company.
The discovery of significant quantities of hydrocarbons in the region of the Eastern Mediterranean creates conditions for wider interest convergences among all the countries in the region.
At the same time, the serious developments in the Eastern Mediterranean increase the need for a stability pillar in the region.
Cyprus can become this reliable and credible pillar of political, energy and economic cooperation in the Eastern Mediterranean.
Energy is indeed a significant parameter in these prospects. But what is the current state of play and the priorities and challenges of Cyprus in this environment?
Dear Friends,
Following the two previous licensing rounds, Cyprus has entered into six Exploration and Production Sharing Contracts with industry heavyweights, five of which are still in effect.
Eni/Kogas in Blocks 2, 3 and 9. Total in Block 11 and in Block 12 Noble Energy, Delek Drilling and Avner Exploration. Recently with Shell who has acquired a 35% interest in Block 12.
With commerciality declared for “Aphrodite”, Cyprus and Block 12 contractors are discussing to establish the Development and Production Plan of the field. And, they are engaged in commercial discussions with potential buyers in Cyprus and Egypt for long-term gas contracts.
In the current economic environment and considering the existing gas quantities, the most viable option commercially seems to be a regional direct pipeline option to existing infrastructures in Egypt, the LNG facilities at Idku and Damietta, and Cyprus.
In fact, Cyprus and Egypt signed an Agreement in August 2016 for the transport of natural gas via a direct subsea pipeline from the Exclusive Economic Zone of Cyprus to a landing point in the Exclusive Economic Zone of Egypt or onshore Egypt, for domestic consumption or re-export.
This is one of a series of legal arrangements which will further support the sale of Cypriot natural gas to buyers in Egypt, provide certainty to investors and complement the relevant commercial discussions which are underway.
The world class gas discovery at “Zohr” offshore Egypt by ENI, confirmed the important gas potential of the region. The discovery, and indeed its proximity to Block 11 of the Cyprus EEZ, has attracted the interest in the region of oil companies, not only for exploration purposes but for investments as well.
This has led to an upgrade in the interest in the Blocks of Cyprus’ EEZ, which was evident in the results of the 3rd Round for hydrocarbon exploration licenses for Blocks 6, 8 and 10. These Blocks are areas largely unexplored and appear to contain carbonate structures, as is the case of “Zohr” offshore Egypt.
The six applications received by eight high caliber companies, the likes of ExxonMobil, Qatar Petroleum, Statoil, ENI, Total, Capricorn Oil, Delek and Avner, allow us to await an aggressive exploration program.
Dear Friends,
Gas exploitation does not stand in a void. Geostrategic circumstances and relations pose significant importance, particularly in a region like the Eastern Mediterranean.
Cyprus, with the exception of Turkey, maintains excellent relations with all its neighbors, including Lebanon, Israel, Egypt, Jordan and Greece and puts great effort in establishing and enriching cooperation in the region.
Accordingly, Cyprus has signed a Delimitation Agreement with Egypt, Israel and Lebanon. Additionally a Framework Agreement for Unitization was signed with Egypt and we are in advanced discussions with our Israeli partners. Similar agreements are under negotiation with Lebanon as well.
Particularly significant are the three high-level trilateral meetings held so far between Cyprus, Israel and Greece and Cyprus, Egypt and Greece resulting in common statements and the Nicosia and Athens Declarations respectively.
These are agreements to further economic cooperation and strengthen our three-way emerging political alliance, and to accelerate negotiations on the outstanding issues related to the delimitation of our neighboring maritime zones.
Regional cooperation will strengthen the appetite for investment and development. And indeed it is my belief that challenges in the region are at the same time opportunities for win-win developments.
To conclude from where I began my address, a reunited Cyprus will serve the role of a pillar of stability and strengthen the link between the European Union and the Eastern Mediterranean and Middle East. A reunited Cyprus can very well be the link to achieving this.
In a post solution era, Cyprus relations with Turkey will change. This will open up opportunities for cooperation with a large country with substantial energy needs.
To put it in the words of Mr. Amos Hochstein, Special Envoy for International Energy Affairs of the United States “Cypriot gas exports to Turkey and/or Egypt, enables Egypt to satisfy its own power needs and export surpluses to international markets via existing but now idle, LNG terminals”. While, “new resources will allow Turkey to diversify its heavy dependence on a small number of suppliers.”
Dear hosts,
Once more I would like to thank you for the honor to speak at this prestigious forum and wish you every success in your proceedings.
I am looking forward to a fruitful discussion.
Thank you.
