Karen Ayat* Natural Gas Europe
Interview with Dr. Theodore Tsakiris, Assistant Professor, Geopolitics of Hydrocarbons, University of Nicosia, Cyprus
Natural Gas Europe was pleased to have an opportunity to interview Dr. Theodore Tsakiris, Assistant Professor, Geopolitics of Hydrocarbons, University of Nicosia, Cyprus, at the 2nd Annual Cypriot-Greek Oil & Gas 2013 Summit organized by IRN in the southern coastal town of Limassol.
How realistic is the hoped-for resources boom in Cyprus?
What we have known since December 2011 is that Aphrodite contains a sizable volume of high quality natural gas between 5-9 tcf with a gross mean average of 7 tcf (trillion cubic feet). The appraisal or confirmatory drilling on Aphrodite, which will be completed by September 2013, will give us an accurate estimate of the exact size of the field, its extractability and its quality. There is a 50% probability that the size of the field is at 7 tcf, a 25% probability that it will be at 5 tcf and another 25% probability that it will be at 9 tcf. In addition to Aphrodite Noble has recently announced plans to explore a second area within Block 12 were seismic data analysis indicates the existence of another promising play capable of containing 3-5 tcf. Exploration drilling will begin in this second Block 12 play over the first four months of 2014. The greatest challenge of course is ahead and relates to the results of the exploration programme set out for 2014-2016 by ENI/Kogas and Total. Cypriot authorities appear confident that the exploratory programme will result in discoveries even greater than Aphrodite.
How much gas is needed to justify the commercial viability of the Vassilikos LNG plant?
We need around 8-9tcf to justify the lengthy and costly project of building the Vassilikos LNG plant. If the appraisal drilling confirms that Aphrodite contains 7tcf it would also be marginally viable to proceed with the LNG terminal without the need for additional discoveries.
What are the qualitative characteristics of Cypriot gas?
Natural gas, as it comes out of the ground, is very variable in composition, depending on its location. Natural gas is a combustible mixture of hydrocarbon gases. While natural gas is formed primarily of methane, it can also include ethane, propane, butane and pentane. In its purest form, it is almost pure methane and it is referred to as 'dry' gas. According to preliminary indication, the gas offshore Cyprus has a high percentage of methane, over 90% a fact that increases its commerciality since it would not need 'sweetening' or 'refining' in order to be utilized for LNG exports. The extractability rate is very high.
Turkey seems to be a late participant in the discussion around the transportation of Israeli gas. Do you think it could replace Cyprus and become Israel's energy partner?
Israel has not yet formulated a clear energy policy. We are awaiting a decision regarding its willingness to export its gas, the quantities considered, the export methodology and the market destination. The Israeli-Turkish recent rapprochement has been blown out of proportion and is primarily related with the situation in Syria and the U.S. push to establish a stable and anti-Iranian post Asad regime if the Syrian civil war ends with a major Sunni victory. Any Israeli pipeline to Turkey would have to cross through Lebanon, Syria or Cyprus and there is simply no political will to remove the major geopolitical obstacles that lie along the route of such a theoretical pipeline.
Is Russia likely to loosen its grip over the European market allowing the entry of new Eastern Med players?
Russia is not very enthusiastic about the hydrocarbons developments in the Eastern Mediterranean. The latter explains why it is trying to get a foothold in Israel, Cyprus and Lebanon. At the same time we should not over-exaggerate at the medium-term export potential of the area. Russia is and will remain the major exporter of oil & gas to the EU market. 20 bcm/y of Cypriot gas and 20 bcm/y of Israeli gas could be significant by 2025 could be a significant contribution to Europe’s import diversification but at that time Russia could well export around 200 bcm to Europe OECD and the European Union. We need to keep this into mind. Moreover I sincerely believe that if Russian companies participate in the East Med hydrocarbon game with European partners they will most certainly secure a significant piece of the pie. Their major problem is that they continue to go in “solo” and this scares away a lot of people, entities and interest groups who would otherwise do business with Gazprom.
*Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.