Exploration on hold
Attention turns to developing Cyprus’ Aphrodite gas field
The third well drilled in Cyprus’ Exclusive Economic Zone (EEZ) failed to reveal commercially exploitable natural gas reserves. Italian multinational Eni’s Saipem 1000 drillship drilled to a depth of 5,485 meters in Amathusa, in Block 9, without yielding positive results.
This is the second failed attempt by the Eni-KOGAS consortium in Cyprus’ EEZ. The consortium is hoping to get similar treatment to that given to Total, and submitted a request to extend its exploration license. As it stands today, the license expires in February 2016, with the consortium negotiating with Nicosia for a two year extension. Eni reportedly plans to use this period to form a more precise picture of the previously unexplored area and reevaluate the geological model and data collected in both drills.
With Total and Eni’s failure to locate commercially exploitable quantities of natural gas, all five blocks awarded in the second licensing round to big fanfare in 2013 yielded disappointing results. Of course, this does not rule out positive results in the future with the possible extension of the exploration program — granted for Total, and hoped for by Eni.
EXPLORATORY DRILLING ON HOLD
If Eni’s failure in Onasagoras and Amathusa, both in Block 9, is in itself a setback for Cyprus (although not entirely unexpected given the success rate for drilling at such depths), it does not mark the end of bad news for Nicosia. The Eni-KOGAS consortium, which holds exploration rights in Blocks 2, 3 and 9, is legally bound to drill at least four wells in its current exploration program. But, after two unsuccessful wells and over $300 million spent, the program is shrouded in doubt. No exploratory drilling is expected this year in Cyprus (the Saipem 1000 drillship is scheduled to undergo maintenance lasting around five months) and could possibly be delayed for much longer. Indeed, with current oil prices, the Italian company has suffered significant losses in the last quarter of 2014, leading to cutbacks and the decision to sell up to €8 billion ($8.9 billion) of assets. Its priorities seem to lie a bit further south, after pledging to invest $5 billion in Egypt. Similarly, Noble has suspended further drilling plans in Block 12 due to the slashing of its exploration budget.
AFTER TWO UNSUCCESSFUL WELLS AND OVER $300 MILLION SPENT,
THE PROGRAM IS SHROUDED IN DOUBT