Frixos Dalitis
The licensing of block 5 in the ExxonMobil and Qatar Energy consortium sends clear messages regarding the prospects of the energy reserves of the Cyprus EEZ. Energy Minister Natasa Peleidou underlined the importance of expanding cooperation with the consortium, stressing that it shows the confidence of ExxonMobil and Qatar Energy in the prospects of the Cyprus EEZ at a difficult time for the oil and gas industry. At the same time, however, he notes that the new licensing further strengthens the cooperation of the Republic of Cyprus with the USA and Qatar, ensuring the continuation of the energy program.
The Minister of Energy also refers to the resumption of the confirmatory drilling in block 10 and the prospects created by the results that are expected to emerge in 2-3 months. He also talks about the prospects for commercial development of the deposits of the Cyprus EEZ, the consultations with Egypt and Israel for the Aphrodite deposit as well as the electricity interconnection agreement that has been signed.
SEE ALSO: Signatures for the licensing of plot 5 dropped
– Let's start with the recent agreement for plot 5. What does this signing mean at the political level, but also in terms of the energy program of the Republic of Cyprus?
– The Block 5 agreement further strengthens the already excellent cooperation between the Republic of Cyprus and ExxonMobil and Qatar Energy. Since 2017, when we signed the first contract with the consortium for block 10, the companies have proved in practice that they are our valuable partners in the effort we make for the optimal and sustainable development of the hydrocarbon resources in the Cyprus EEZ. Initially, we had the important discovery of the “Glafkos” gas field, in February 2019 and, today, after the inevitable delays due to a pandemic, they are the first of our licensees to resume their research activities, with evaluation drilling said deposit. With the new licensing, the consortium shows in a difficult time for the global oil and gas industry, that it continues to trust the prospects of the Cyprus EEZ, while we, as Cyprus, ensure the continuation of our energy program. At the same time, the relations that the Republic of Cyprus maintains with both the United States and Qatar are further strengthened. Indicative of all this, I think, is the recent statement of the CEO of Qatar Energy and the Minister of Energy of Qatar, on the occasion of the licensing of section 5, who stated that he looks forward to continuing cooperation with the Cypriot Government and that the consortium aims to contribute in the exploration of natural resources in the Republic of Cyprus, making with the new licensing another important addition to its international portfolio.
– Obviously the Turkish reactions that exist are expected. Are they a cause for concern? Is it something you discussed with the companies? What will happen, for example, if Turkey launches any incident?
– Really expected, since the challenges and illegal actions in our EEZ by Turkey are timeless. As the Republic of Cyprus, we cooperate with the consortium of ExxonMobil and Qatar Energy, but also with the rest of our licensees, continuing the planning and work for the exploitation of hydrocarbons in the EEZ of Cyprus, on the basis of International Law and, in particular, the United Nations Convention. for the Law of the Sea.
– Do we have any indications regarding the energy reserves of plot 5? When will we have the results of relevant studies?
– There are indications, which is why the consortium is interested in the plot. But in order to talk about possible targets, we will have to wait for the seismic surveys to be conducted by the companies, the processing and interpretation of the collected data and, subsequently, the completion of the necessary geological and geophysical surveys. These are works that will start in 2022 and need time to be completed. We estimate that we will have a clearer picture of the prospects of piece 5 in 2 to 3 years.
– After “5” what follows? Are there discussions in relation to other plots in the Cypriot EEZ?
– At this stage there are no discussions for another piece of the Cyprus EEZ, but this may change in the future, depending on how the research program of our licensees is progressing, but also in general in the wider region. We, for our part, are following the developments and if the right conditions exist, we will not hesitate to announce a new round of licensing.
– As far as plot 10 is concerned, the drilling has started. When do we expect to have some results in terms of its deposits?
– As you know, there is already a first estimate, which was given to us after the completion of the first drilling at the “Glafkos” target, in February 2019. Specifically, announcing the discovery of the deposit, the Ministry of Energy pointed out that, based on the preliminary It is estimated that this is a high quality reservoir with a total gas volume of 5 to 8 trillion cubic feet. The evaluation drilling in “Glafkos”, which started just this week, will be completed in about 2 to 3 months. Its results will help to better estimate the magnitude of the discovery and the ultimate goal is to gather important information, which will then be used for studies on the development of the deposit.
– You recently mentioned that the most likely solution is to transfer the quantities of the plot to Egypt. Practically, when will we see natural gas being utilized and bring benefits to the Cypriot economy?
– Since the needs of Cyprus for natural gas are relatively small and alone can not lead to the development of gas discoveries that we have in the Cypriot EEZ (“Glafkos” and “Aphrodite”), for exclusive use in Cyprus , it seems that the best solution, under the circumstances, is the regional markets, along of course with the domestic use. Egypt, therefore, is the predominant destination, since its needs for natural gas are great and the production from its own fields will not be able, in the next few years, to meet the needs of the country. Let me also remind you that Egypt also has the basic infrastructure, such as its terminals, which will help promote Cypriot gas in the markets. More mature for exploitation is, as you know, the “Aphrodite” deposit, for which the Republic of Cyprus issued an Exploitation License in November 2019. A specific Development and Production Plan was also approved, which provided for the start of natural gas production in 2026 – 2027 , but in the meantime two important events have taken place, which have affected the work: first, the COVID-19 pandemic and its serious effects on the international oil and gas industry, and second, the acquisition of Noble Energy by Chevron, which Utilizing its vast experience in the field, it re-evaluates the Development and Production Plan, exploring any synergies with other regional infrastructures to optimize the development of the deposit. We are in constant contact and coordination with the company, which is now in the final stages of this process, with this issue being a key part of the discussion we had with the President of Chevron on the Middle East, Africa and South America and Clay Neff, on my recent trip to Houston. Its results are expected in early 2022, when we will have a much better picture of when gas production will begin in the Cypriot EEZ.
– Is there cooperation between the companies regarding the commercial development of the deposits of the licensed plots?
– Given that at this stage only one exploitation license has been issued for the “Aphrodite” deposit, the cooperation between our licensees regarding the commercial exploitation of the discoveries is considered premature. Of course, companies are in contact both with the Ministry of Energy and with each other regarding their research program, as the results of one licensee are likely to influence the decisions of another. In this context, it is possible that some exploratory discussions will take place at a high level, regarding the possibility of future cooperation for the development of deposits.
Decisions are coming for EastMed
The Eastern Mediterranean to become a pioneer in green energy
– On January 1, you will take over the chairmanship of the Eastmed Gas Forum. What are the goals and aspirations and what is their significance?
– This development is particularly positive for Cyprus, as we will be given the opportunity to promote actions and policies related to our green energy strategy. Given the goal of the EMGF to make responsible use of offshore discoveries in the Eastern Mediterranean, a key priority of the Cypriot presidency is to promote policies and actions, through the Forum, that will help our region become a pioneer in the green energy transition. Among other things, we are preparing proposals for the creation of technical teams that will study alternative clean fuel issues, such as blue and green hydrogen and blue ammonia, offshore oil and gas activities with RES and carbon dioxide capture and storage via CO2 capture. CO2 transport and suitable storage sites.
– We recently had the signing of the tripartite agreement on the electricity interconnection of Cyprus – Greece – Egypt, and last March the Cyprus – Greece – Israel agreement. What do these agreements mean and what are the benefits for consumers?
– The two agreements are important milestones in the joint effort of our countries to promote regional cooperation in the field of energy. It is the practical proof that there is a political will for close cooperation and coordination of our competent Authorities, to facilitate the permits and approvals required for the promotion and implementation of the extremely important infrastructure projects. In addition to their geopolitical importance, as they further deepen our relations and alliances, electrical interconnections are also a crucial factor in our effort to further penetrate RES in our country's energy balance, while playing a major role in Fulfilling our commitments to reduce carbon dioxide emissions, meet our European targets and contain the negative effects of climate change. At the same time, they bring us one step closer to implementing a significant part of the infrastructure of the Eastern Mediterranean emerging energy corridor, which will upgrade energy security and create prospects for new investments in the green energy sector, for greater competition in the electricity market. and to reduce the price of electricity for consumers.
Decisions are coming for EastMed
– Regarding the construction perspective of the Eastmed pipeline, how are the data today? Is it a practical scenario?
– The political commitment to support the EastMed pipeline remains, having been confirmed at the recent tripartite Summit of Cyprus, Greece and Israel. In addition, the support of our countries in the project was expressed in January 2021 by the Ministers of Energy of Cyprus, Israel, Greece, Bulgaria, Hungary and Serbia, in the context of a discussion on “Strengthening Energy Cooperation and Opportunities and Advantages of the EastMed pipeline “. As a strategic choice that plays an important role in the security of supply of our countries and the European Union, but also in the diversification of sources and routes of gas, fuel – a bridge for our energy transition, the EastMed pipeline has been designated by the European Commission, in 2013 until today, as a Project of Common Interest (CSR). It is expected to maintain this characterization with its inclusion in the next, 6th Union CSR List at the beginning of 2022. Its implementing body is now evaluating ways to enable the transfer through pipeline and hydrogen, the technology that emerges as key for achieving the goal of a gradual EU transition to zero-emission emissions. The decision on whether or not to implement the complex project will be determined by the final FEED feasibility studies, which are expected to be completed by the end of 2022. The European Commission has funded these studies with € 36.5 million, through the project “Linking the Europe “, and based on their results the implementing body will make the final investment decision.
Attracting investors to create energy storage infrastructure
– Where are we in terms of green energy goals?
– We have exceeded our mandatory targets for 2020. Both in RES and energy savings. This proves that the € 350 million incentives given in the form of sponsorship projects over the last fifteen years have made a significant contribution to both achieving the goals and changing the culture of the people in favor of the green transition. Specifically, to mention that the binding target of 13% for the contribution of RES in the final energy consumption was exceeded by more than 30%, reaching 17%, while we managed to have a cumulative energy savings of 120%. In addition, the indicative target for RES penetration in heating and cooling, which was 23.5%, rose to 38.55%. Currently the installed RES capacity amounts to 467 MW and in addition to the 127 commercial RES projects, with a capacity of 237.8 MW, are under implementation. We have made great progress in a decade, with electricity from RES having increased by 162% from 2011 to 2020. In 2020 the production of electricity from RES amounted to 612 GWh, of which 39% from wind farms, 51% from photovoltaic systems and 10% from biomass.
– Are you reassured about achieving your goals?
– Not at all. The challenges are in front of us to reduce the price of electricity, to change the model of business development and for climate neutrality in 2050. Committed to the implementation of the Green Agreement, we are already in the process of upgrading our goals for 2030 and already, in cooperation With all the relevant ministries and our scientific advisors, we have started the process of reviewing the National Plan for Energy and Climate 2021-2030. Our goal is to set even more ambitious goals that will help us achieve a rapid transition of our country to the green economy. At the same time, we are promoting measures and policies that are already included in our strategic planning and will be funded by the Recovery and Sustainability Mechanism, the European Structural Funds, the Cohesion Fund and the Fair Transition Fund. Our ministry has managed to secure four times more resources for the programming period 2021-2027, which in total will exceed € 540 million. Of these, 61% will be allocated for the energy transition of our country and 38% for the competitiveness of businesses and the economy. Two pillars are interconnected, I believe, as business support involves green investment and a push for a more sustainable and competitive growth model, which promotes digital technologies, circularity and innovation. Already, in 2021, projects worth a total of € 130 million have been announced and in 2022 we plan to announce sponsorship projects worth € 150 million, of which more than half will be related to the energy upgrade of businesses, local authorities and households. Among other things, important projects that will push the green transition of our country are the electricity interconnection infrastructures mentioned above, as well as the creation of energy storage infrastructure, an issue for which we are working intensively in order to attract investors.
