Cyprus and Egypt sign unitisation deal on the joint exploitation

 Cyprus Mail

Cyprus and Egypt yesterday signed a unitisation agreement on the joint exploitation of hydrocarbon reserves, on the median line between the two countries’ respective exclusive economic zones (EEZ).

The seminal agreement paves the way for commercial interests to take advantage of any hydrocarbon reserves found in areas that could cross either side of the dividing line between the two countries’ EEZ.

In total, three bilateral agreements were signed yesterday during President Nicos Anastasiades’ two-day official visit to Cairo, marking an upturn in relations between Cyprus and the interim government of Egypt.

Foreign Minister Ioannis Kasoulides signed a Revised Aviation Agreement between Egypt and Cyprus while Energy Minister Giorgos Lakkotrypis signed a framework agreement for the Development of Cross-Median Line Hydrocarbon Resources.

A cooperation agreement was also signed between the Cyprus Institute of Neurology and Genetics and the Children’s Cancer Hospital of Cairo.

The unitisation agreement is a final agreement between two governments, and the first one signed between Cyprus and one of its neighbours, with significant implications for the development of the industry in the Eastern Mediterranean.

U.S. Is Overtaking Russia as Largest Oil-and-Gas Producer

Photo: AFP

The Wall Street Journal              
Russel GOLD  and Daniel GILBERT 

The U.S. is overtaking Russia as the world's largest producer of oil and natural gas, a startling shift that is reshaping markets and eroding the clout of traditional energy-rich nations.

U.S. energy output has been surging in recent years, a comeback fueled by shale-rock formations of oil and natural gas that was unimaginable a decade ago. A Wall Street Journal analysis of global data shows that the U.S. is on track to pass Russia as the world's largest producer of oil and gas combined this year—if it hasn't already.

The U.S. ascendance comes as Russia has struggled to maintain its energy output and has yet to embrace technologies such as hydraulic fracturing that have boosted American reserves.

"This is a remarkable turn of events," said Adam Sieminski, head of the U.S. Energy Information Administration. "This is a new era of thinking about market conditions, and opportunities created by these conditions, that you wouldn't in a million years have dreamed about."

No easy to break gas dominance of Russia

Reuters         Henning Gloystein


* Russia's EU market share to stay around 30 pct
* New supplies seen, mainly from overseas LNG

The European Union aims to diversify away from Russian natural gas supplies, yet Reuters research indicates the EU's biggest provider a decade from now could easily still be Russia.

Billions are to be spent on piping gas from Azerbaijan while new finds in Africa and eastern Mediterranean also promise new supply for the EU, which currently buys mostly from Russia and Norway.

Europe also gets liquefied natural gas (LNG), mostly from Qatar, and the U.S. shale boom could free up LNG exports from there in coming years, too.

But growth in Europe's demand for gas will eat up much of the new potential supply, and the Russians show little willingness to fade away as they gear up to defend their position through massive projects, such as the $35 billion South Stream pipeline to Italy.

"Russia will continue to remain Europe's primary energy supplier, including natural gas supplies, for many years and possibly decades," a U.S. congressional research paper on Europe's energy security said in March.

Reuters' own research indicates that in 2023 Russia will likely remain the dominant supplier, as it boosts exports while EU and Norwegian output declines.

Sudan and Turkey to cooperate in energy

Hurriyet Daily News

Sudan and Turkey signed a memorandum of understanding in the areas of mining, power generation and hydrocarbons, during Turkish Energy Minister Taner Yıldız’s visit to the African country.

Yıldız said May 26 that they would encourage private sector players active in the energy sector – particularly in wind, solar and hydroelectric power – to invest in Sudan.

“We’d like to benefit from Turkey’s experience in industry, mining and transportation,” said Kemal Abdullatif, the Sudanese minister of mining. Also, Sudanese Electricity and Water Resources Minister Tabita Butros Shokia said they could cooperate with Turkey in wind, solar and nuclear energy.

Turkey and Sudan are set to cooperate in mining, hydrocarbons and electricity generation, particularly renewable energy, in accordance with the deals signed by Yıldız, Abdullatif and Shokia, following negotiations between technical delegations.

Yıldız said Turkey would assist with Sudan’s master power generation plan if help was requested. The minister also had talks about possible investment by the Turkish private sector to build a hydroelectric power station on the coast of the Nile river.

Turkey may buy ‘2 mln tons of Yemen LNG’

Russia's Energy Bully Takes a Fall

Alexandros Petersen       Foreign Policy

Just a few years ago, Gazprom had Europe eating out of its hand. But now, the energy giant -- and Putin's power base -- looks set for hard times.

After years as Eurasia's energy bully, Russia's state-controlled natural gas monopoly, Gazprom, is getting a taste of its own medicine. Even as Gazprom seeks to build the tallest skyscraper in Europe as its new headquarters in St. Petersburg, pressure from Russia's neighbors led to a 15 percent decline in the company's profits last year, eating into the state budget. Moscow's single-minded focus on gas exports in an effort to become, in the words of President Vladimir Putin, an "energy superpower" has crippled its ability to adapt to profound changes in the global energy landscape -- from the shale gas revolution in North America to the dynamism of new market players such as Azerbaijan. Having spent the last decade making enemies in Central Europe and Central Asia, Gazprom and Russian decision-makers are now reaping what they have sown. 

Policymakers in European capitals could be forgiven for a little schadenfreude right now. Building on the legacy of Soviet gas exports to the Eastern Bloc and parts of Western Europe, Putin and his cohorts in the Kremlin have, for years, used Gazprom as a cudgel in Moscow's relations with European Union member states. Over the past decade, well over a third of EU gas imports have come from Russia, with a number of Eastern European states almost completely dependent on Gazprom. Bulgaria, for example, receives more than 95 percent of the natural gas it consumes from the company. Millions of European consumers shivered through the winters of 2006, 2008, and 2009 when Gazprom cut off supplies in order to squeeze middlemen in Ukraine, Belarus, Georgia, and Moldova who had had the temerity to buck Moscow's policies.

Obama backs rise in US gas exports

Richard McGregor and Ed Crooks       Financial Times

The Obama administration has signalled support for more plants to export liquefied natural gas, as the US embraces its surging energy production as a key new element of its national security policy.

Barack Obama said at the weekend the US was likely to be a net gas exporter by 2020, the strongest sign yet that the president is swinging his support behind higher energy sales overseas.

The Department of Energy is studying applications for new liquefied natural gas terminals, with approval of one in Texas likely within months. It would be only the second such approval granted for sales to countries without trade agreements with the US, such as Japan, the world’s largest importer of LNG.

The decision over new export terminals coincides with a White House rethink of energy policy, aimed to give it an elevated place in US diplomacy.

“I’ve got to make an executive decision broadly about whether or not we export liquefied natural gas at all,” Mr Obama said during a trip to Costa Rica. “But I can assure you that once I make that decision, then factoring in how we can use that to facilitate lower costs in the hemisphere and in Central America will be on my agenda.”

The North American shale revolution over the last decade has unlocked large reserves of gas that were not previously accessible at commercially attractive rates.

Global LNG output to reach 360mn tonnes by ’20: Total

Pratap John               Gulf Times

Over the next 10 years, natural gas will play an increasingly important role in meeting the world’s energy needs. LNG, whose many advantages include flexibility and ease of transport, will be instrumental in this “coming of age,” particularly in meeting Asian and European demand

Global LNG output is expected to reach 360mn tonnes and account for 13% of global gas supply by 2020, energy major Total has said in a report.

In 2010, LNG amounted to 9% of global gas consumption with production of nearly 220mn tonnes.

Over the next 10 years, natural gas will play an increasingly important role in meeting the world’s energy needs. LNG, whose many advantages include flexibility and ease of transport, will be instrumental in this “coming of age”, particularly in meeting Asian and European demand.

With demand rising at an average 3% a year for more than 30 years, natural gas has posted more dynamic gains than any other fossil fuel.

Total views the growing role of natural gas as one of the fundamentals of the future energy trends.

Interview with Dr. Charles Ellinas and Mr. Solon Kassinis, Cyprus National Hydrocarbons Company (KRETYK)

Karen Ayat*       Natural Gas Europe

Natural Gas Europe was pleased to have an opportunity to interview Dr. Charles Ellinas, Chairman of the Cyprus National Hydrocarbons Company (KRETYK) and Mr. Solon Kassinis, Vice President of KRETYK at the 2nd Annual Cypriot-Greek Oil & Gas 2013 Summit” organized by IRN in the southern coastal town of Limassol

How mighty is Aphrodite?

SK: Aphrodite'’s proven reserves are estimated at 7tcf. We are planning to have another verification well starting in June  We expect to find 10 tcf at least.

CE: There is a lot of gas already proven and we are certain there is a lot more to be discovered in the 6 blocks already awarded, probably 4 to 5 times as much as Aphrodite. 

How will future oil and gas production, once discoveries are confirmed, contribute in enhancing Cyprus'’ economy and reducing its energy bill? 

SK: Within the 13 blocks in Cyprus’ EEZ, we do envisage to have around 60 tcf. We rely on this gas given that Cyprus’ economy is now in a very bad shape.

CE: We expect that Cyprus will start construction in 2016 creating thousands of jobs as a result. The services and supplies industries will benefit as well as subcontractors. A liquefied natural gas terminal in Vassilikos will be ready to deliver natural gas to the Cypriot market by the end of 2018 reducing electricity prices by at least 50% (the price for electricity is very high in Cyprus), whereas by the end of 2019 Cyprus will be in a position to export liquefied natural gas. By 2025 Cyprus and the Levantine Basin will be able to produce 25 million tones of natural gas per year and cover 50% of the EU’s additional energy needs.

Interview with Dr. Theodore Tsakiris, Assistant Professor, Geopolitics of Hydrocarbons, University of Nicosia, Cyprus

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.

AGRI LNG: Potential for Project High if European Demand Remains Firm

Natural Gas Europe



The Interconnector Azerbaijan-Georgia-Romania-Hungary (AGRI) pipeline project is still possible, and could provide a stimulus for “east Caspian countries” to produce more gas, according to energy specialist Liana Jervalidze.

AGRI, a proposed source of liquid national gas (LNG) to Europe, could be an auxiliary to the major gas pipelines once they come on line in 2018, she said.

“We don’t see now immediately chances for this project to be realized but in ten years time when Shah Deniz Two and TANAP will be implemented and addition volumes of gas will be available in Azerbaijan from other projects…maybe there will be room left for LNG as part of Azerbaijan energy diversity strategy,” she said during the 12^th Georgian International Oil, Gas, Infrastructure & Energy Conference in Tbilisi on March 26.
Jervalidze, a professor at Ilia State University in Tbilisi and Analyst on Geopolitics of Energy, outlined the potential – and the challenges – for the AGRI project during the conference.

AGRI, a joint project between ROMGAZ, Georgian Oil and Gas Corporation, SOCAR, and Hungry’s MVM, could help the European Union met their 2050 goals to diversify types and sources of energy, Jervalidze noted.

If put on line, AGRI would have the potential to bring between 2 bcm and 8 bcm to Europe.

Noble Energy considers pipeline from Israel to Turkey

Reuters

Texas-based Noble Energy will double in size in the next five years, with a big boost coming from natural gas production in the eastern Mediterranean, its chief executive said on Thursday.

"We expect to double in size over the next five years. Double in size in terms of production, double in size in cash flow, double in size in terms of reserves," CEO Charles Davidson told reporters during a visit to Israel.

Noble is leading a number of consortia drilling for and producing gas off the Israeli and Cypriot shores, and it has already discovered an estimated 35 trillion cubic feet (tcf) of reserves over the past few years.

Israel's Tamar field, discovered by Noble in 2009, holds an estimated 10 tcf. It went online on March 30 and can meet the country's gas needs for decades.

The much larger Leviathan field, set to begin production around 2016, is mostly slated for exports.
The discoveries were a welcome surprise in Israel, which has relied heavily on energy imports. Analysts have said the deposits are ideally situated to serve both Europe and Asia.

Nobel, which had a 2012 market capitalisation of $17.6 billion, forecasts end-2013 total production to be 300 thousand barrels of oil equivalent per day (MBoe/d).

Exploring Potential Export Markets for Israeli Gas

Karen Ayat          Natural Gas Europe

Start of production at Tamar

Natural gas began flowing from the Tamar field off Israel's Mediterranean shores on Saturday 30 March 2013 producing 300 million cubic feet per day. When combined with the existing Mari-B volumes of 200 million cubic feet per day, the current daily sales are nearly 500 million cubic feet per day and expected to reach 700 million by the end of 2013. The Tamar field was discovered by Noble Energy in 2009 and was the largest deepwater natural gas discovery in the world in 2009 estimated at the time to contain 9 tcf of gas. Noble made a new estimation upping the gross resource estimate of Tamar to 10 trillion cubic feet (Tcf) as a result of development drilling and continued reservoir analysis and modeling. The updated estimate was confirmed by an independent assessment conducted by Netherland, Sewell & Associates, Inc. 

Previously discovered Mari-B

Mari-B was the first offshore natural gas field in the State of Israel discovered by Noble in March 2000. Noble started gas production from the Mari-B field in 2003. Despite its relatively small size (containing around 1 tcf of gas), the Mari-B field was not only a momentary relief for Israel but played a tremendous role in enabling Israel to shift from heavy fuel oils and coals to gas for its electricity production. Soon after, Israel began importing Egyptian Gas to supplement its local Mari-B gas and meet domestic demand. By the end of 2010, Israel relied on gas for around 40 per cent of its electricity supplied almost equally by its own Mari-B field and Egypt. 

Interview with Charles Ellinas Chairman Of Cyprus Hydrocarbons Co.

Cyprus Mail

Interview with Charles Ellinas, chairman of the state hydrocarbons company KRETYK

* ‘Business as usual’ for oil and gas giants: Cyprus’ financial crisis not a problem
* Noble rebuffed Turkish demands to back away from exploratory drilling
* Six licensed blocks may hold 30 trillion cubic feet of gas - building an LNG first is a must

Q: There appears to be some confusion over the precise role of KRETYK, with reports suggesting some overlap with the duties of the Natural Gas Public Company, DEFA. Could you clear that up?

A: We are an oil and gas company, much like, say, Italy’s ENI. There is no overlap with DEFA, because we’ve met with them, and we agreed we have no intention of getting involved in gas sales and distribution in the island. And as far as I’m concerned, when we do bring the gas to the island - hopefully in 2018 - to Vasilikos plant there will be a link there and DEFA will take their gas and off they go. They’ll sell and distribute it and everything else. That’s not our job. DEFA is much like a utility company, much like for water. Gas is also a utility.

KRETYK is responsible for developing, managing exporting and operating gas. The Energy Service at the Commerce Ministry is responsible for licensing, and also polices adherence to the requirements of the production-sharing agreements. The companies involved in the production-sharing agreements have obligations to fulfill. We are not going to be policing that, it’s the job of the Energy Service, and there’s a very good reason for it: it could be that by the third round of licensing we could be strong enough to go into business with someone else and be part of a license. So we can’t be policing ourselves, someone else has to do it.

Natural Gas to Cyprus

Michael J. Economides      Energy Tribune
 
The news of the Cyprus Public Natural Gas Agency, DEFA’s recent decision to include only LNG strategies and exclude CNG technologies from further negotiations for the interim delivery of natural gas to that country is shocking, illogical to the extreme, almost insulting to the intelligence of the people. It becomes even more frustrating that all is secret and it is impossible to see the rationale. But no matter what, it is totally flawed.

LNG is the obvious means of large trans-national gas transport, but for Cyprus it was a bad idea ten years ago, it was worse three years ago and it is disastrous today, just four years before the country is expected to bring on line its own plentiful supply. The situation is really very simple. The needs of Cyprus (100 million standard cubic feet per day) are not even remotely enough to justify interim LNG, stationary or floating. The only possibility for Cyprus interim solution has always been CNG; and if, for whatever reason, that is seen as unworkable, then staying with diesel, with all the associated environmental problems and EU fines is preferable, by far.

Iraq eyes EU gas exports through Turkey

Kwok W. WAN      Petroleum Economist

LONDON: Iraq wants to export gas found in the blocks on offer in its fourth licensing round

to Europe by pipeline through Turkey and as liquefied natural gas (LNG).


“We are awaiting various development plans for the fields to decide whether we should start work on a gas-export project to the EU through Turkey,” Iraqi deputy oil minister Ahmed al-Shamma told reporters on the sidelines of the Iraq Mining conference on Wednesday. “That’s what we hope to achieve from the fourth round, to discover some good gas reserves to give us assurance for that project.”


Iraq has pre-qualified 46 companies to bid for the 12 blocks, with the deadline for bids in January 2012. The 46 firms include supermajors – BP, Chevron, ExxonMobil, and Shell – national oil companies from China, Malaysia and India, as well as a handful of independents. US independent Hess was excluded because the firm has signed upstream deals with the semi-autonomous Kurdistan Regional Government, which the oil ministry regards as illegal.