Oil, gas and diplo­macy

Financial Mirror (Cyprus) - - FRONT PAGE -

Egypt and Is­rael sent two new diplo­mats to Cyprus on Fri­day, just as the three neigh­bours are up­ping the ante in their energy, trade and se­cu­rity re­la­tions.

Cairo’s Am­bas­sador Hus­sein Ab­delka­rim Tantawy Mubarak pre­sented his cre­den­tials, a day af­ter Pres­i­dent Anas­tasi­ades and Ab­del Fat­tah El Sisi had a tele­phone con­ver­sa­tion to dis­cuss energy co­op­er­a­tion, de­spite the re­cent dis­cov­ery of an enor­mous off­shore gas­field in Egyp­tian wa­ters, the big­gest in the eastern Mediter­ranean.

Some had feared that Ital­ian ENI’s dis­cov­ery of 30 tril­lion cu­bic feet (tcf) at the Zohr field, which is in close prox­im­ity to the bor­der of Cyprus’ off­shore Block 11, cur­rently li­censed to French oil gi­ant To­tal, would up­set ne­go­ti­a­tions to sell Cyprus gas to Europe via BG’s plant in Egypt.

Egyp­tian of­fi­cials were quick to re­it­er­ate their good re­la­tions with Cyprus and that the two coun­tries would main­tain ne­go­ti­a­tions for fu­ture gas sales, not ex­pected be­fore 2018 or 2020.

The dis­cov­ery within the Egyp­tian Ex­clu­sive Eco­nomic Zone (EEZ) also sent shivers down the backs of the Is­raelis, that had so far main­tained the lead for the big­gest dis­cov­ery at the Le­viathan gas­field, as the new sup­ply could make fu­ture Is­raeli gas ex­ports re­dun­dant as well.

But Egypt does not want to burn its bridges with its neigh­bours, at least not within the po­lit­i­cal tur­moil and Is­lamic ex­trem­ism that has swept across the Mid­dle East. On the other hand, no mat­ter the mag­ni­tude of the dis­cov­er­ies, Egypt’s grow­ing pop­u­la­tion and econ­omy will con­tinue to make it a mainly net buyer of nat­u­ral gas for do­mes­tic use.

Cyprus Gov­ern­ment Spokesman Ni­cos Christodoulides said that the Anas­tasi­ades-El Sisi con­ver­sa­tion fo­cused on the fact that the Zohr dis­cov­ery wil prob­a­bly raise the im­por­tance of the re­gion’s gas­fields.

“It is our de­ter­mi­na­tion that we co­op­er­a­tion at all lev­els.”

Pre­sent­ing his cre­den­tials, Egypt’s Am­bas­sador Mubarak said that Cyprus can be a bridge be­tween the peo­ples on the north and the south of the Mediter­ranean and praised the sup­port the is­land ex­pressed af­ter the 2013 revo­lu­tion.

Pres­i­dent Anas­tasi­ades said “we are wit­nesses to a ro­bust bi­lat­eral re­la­tion­ship with­out prece­dent, which can be en­hanced even fur­ther. You ar­rive in Cyprus at an in­ter­est­ing time.

“The re­al­i­sa­tion of the sec­ond Cyprus-Egypt-Greece Tri­par­tite Sum­mit Meet­ing, in Nicosia and the Dec­la­ra­tion adopted at the level of the Heads of States, puts in prac­tice the co­op­er­a­tion be­tween our coun­tries to achieve sta­bil­ity and pros­per­ity in the re­gion to the com­mon ben­e­fit of our peo­ples.”

“Shortly, we ex­pect that the ex­pan­sion of this co­op­er­a­tion will be achieved,” he said, adding his con­grat­u­la­tions for the hugely im­por­tant dis­cov­ery of a gas field off­shore Egypt which will cer­tainly trans­form the energy sec­tor and have a decisive im­pact on the econ­omy for the ben­e­fit of the Egyp­tian peo­ple.

“Un­doubt­edly, the said gas field is yet another proof of the


de­velop rich­ness of the Mediter­ranean Sea in nat­u­ral re­sources and has the po­ten­tial of not only en­hanc­ing the ex­ist­ing co­op­er­a­tion be­tween neigh­bour­ing coun­tries in the hy­dro­car­bon sec­tor but also of cre­at­ing new syn­er­gies be­tween them for the ben­e­fit of their peo­ples and of the re­gion as a whole.”

Pre­sent­ing her cre­den­tials, Is­rael’s Am­bas­sador Ravi­aZadok, a long-term di­rec­tor of the Mid­dle East Desk at the Min­istry of For­eign Af­fairs in Jerusalem said Cyprus’ unique lo­ca­tion in the eastern Mediter­ranean, as well as its re­spected po­lit­i­cal lead­er­ship, may serve as a fer­tile ground to es­tab­lish­ing a net­work of re­gional co­op­er­a­tion, in which Is­rael and Cyprus may play a lead­ing role.

“Un­der the Cypriot lead­er­ship, we can cre­ate an en­hanced re­gional co­op­er­a­tion on se­cu­rity, energy se­cu­rity, tourism and eco­nomic de­vel­op­ment, serv­ing as an ac­cel­er­a­tor for sta­bil­ity in our re­gion. Chal­lenges of terror and Is­lamic ex­trem­ism make this re­gional co­op­er­a­tion more rel­e­vant than ever be­fore.”

In his re­sponse, Pres­i­dent Anas­tasi­ades said that his visit to Is­rael and the fol­low-up visit of Prime Min­is­ter Ne­tanyahu here in Nicosia, later in July, “re­flect the spe­cial bond be­tween our two coun­tries. There are, of course, nu­mer­ous other ex­changes at dif­fer­ent lev­els across the board and our of­fi­cials con­sult fre­quently on a va­ri­ety of is­sues.”

“The dis­cov­ery of vast re­serves of hy­dro­car­bons in the eastern Mediter­ranean has the po­ten­tial to trans­form our re­gion, un­leash­ing eco­nomic de­vel­op­ment and pros­per­ity, and pro­mot­ing peace and sta­bil­ity. Cyprus stands ready to fully co­op­er­ate with its neigh­bours to pro­mote these goals.

Spokesman Christodoulides said that Anas­tasi­ades also had a meet­ing with Yitzhak Tshuva, the Di­rec­tor of Delek Drilling, a joint ven­ture part­ner in the Cyprus Aphrodite gas­field and Is­rael’s Le­viathan, and sub­mit­ted the com­pany’s de­vel­op­ment plan re­gard­ing the gas­fields, ex­ports and sales.

He said that Energy Min­is­ter Yior­gos Lakkotrypis will now re­spond to the Delek plans so that sub­stan­tial talks can now be­gin for the fu­ture util­i­sa­tion of Cyprus nat­u­ral gas ex­ports.

Delek’s Yossi Abu told re­porters that “we are com­mit­ted to de­velop the Aphrodite Block with the same strat­egy that we have al­ready sub­mit­ted, ba­si­cally to sup­ply the Cyprus and Egyp­tian mar­kets (with nat­u­ral gas) in a quick an ef­fec­tive man­ner. We have al­ready started the up­stream process to these mar­kets and we are in talks with po­ten­tial buyuers of ex­ported gas.”

Re­gard­ing noises from the op­po­si­tion po­lit­i­cal par­ties, doubt­ing the prospects from the gas fields in Cyprus wa­ters and in the re­gion, Christodoulides “the sub­ject of energy if very im­por­tant and calls for pa­tience.”

Ear­lier in the week he and Lakkotrypis had talked about “sig­nif­i­cant news” in the energy sec­tor, at a time when French To­tal had failed to find sat­is­fac­tory gas re­serves within its Cyprus EEZ li­cense, while ENI had de­layed fu­ture prospect­ing.

On Thurs­day, Lakkotrypis met with rep­re­sen­ta­tives of Bri­tish Gas (BG), re­port­edly in­ter­ested in ob­tain­ing gas from the Aphrodite prospect in Block 12, pro­cess­ing it at their LNG plant in Egypt and then re-ex­port­ing it to Europe.

The min­is­ter also said that BG is in con­tact with the Block 12 part­ners (Noble Energy, Delek and Avner) as well as with the state-owned Cyprus Hy­dro­car­bons Com­pany (CHC).

Ac­cord­ing to the Cyprus News Agency, the Block 12 con­sor­tium and CHC are in con­sul­ta­tions with ten other or­gan­i­sa­tions in­ter­ested in the gas, in­clud­ing Union Fenosa, op­er­a­tors of the other LNG ter­mi­nal in Egypt at Dami­etta.

Over the last few days, since the an­nounce­ment of the Zohr find, the min­is­ter has been in fre­quent com­mu­ni­ca­tion with his Egyp­tian coun­ter­part, Sherif Is­mail.

Both coun­tries’ of­fi­cials have stressed that the re­cent dis­cov­ery does not negate Egyp­tian in­ter­est in Cypriot gas im­ports, although Is­mail did in­di­cate that the fi­nal de­ci­sion rests with the oil and gas com­pa­nies.

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