Hungary eyes Cyprus natural gas as it seeks to diversify from Russia

Hungary said on Friday it would be a customer for untapped offshore Cyprus gas as it seeks energy security and to diversify supply away from dependence on Russia.

Hungary Foreign Minister Peter Szijiarto said Budapest considered it a “realistic prospect” to receive natural gas from Cyprus’ Aphrodite field in the future.

He is in Nicosia to sign a memorandum of understanding for cooperation in the energy field – and open the first Hungarian embassy - with his Cypriot counterpart Nikos Christodoulides.

Szijiarto said Hungary’s energy security is of “critical significance”, as it receives natural gas from Russia, but Budapest is constantly looking for alternative supply solutions.

“We want diversification of natural gas sources to increase our energy security and we consider realistic the scenario of extracting and transporting natural gas from the Aphrodite deposit”,” Szijiarto said.

He said the agreement signed will help begin preparing for a situation where Cyprus’ natural gas will, in the medium term, play a role in supplying central Europe.

Cypriot minister Christodoulides said Cyprus’ energy programme was on track and bolstered by the memorandum signed.

He said energy cooperation was not only of ??great importance for both countries but ?for the whole of Europe and beyond?.

“I am convinced that the energy programme of the Republic of Cyprus, which is in full swing and making significant progress, gives more value and importance to the memorandum we have just signed,” said Christodoulides.

He added: “We are creating a solid basis and a general framework for mutually beneficial cooperation in the energy field, covering major issues such as exploration and exploitation of resources, environmental standards, infrastructure, renewable resources…”

Texas-based Noble Energy in 2011 made the first discovery off Cyprus in the Aphrodite block estimated to contain around 4.5 trillion cubic feet of gas – it has yet to be commercialised.

The discovery

of

nearby

Egypt’s

huge

Zohr

offshore reservoir in 2015 has stoked interest that Cypriot waters hold the same riches.

Cyprus aims for natural gas to start flowing to Egypt’s LNG facility in 2022, therefore generating its first revenue from natural gas in the same year.

Cyprus has pushed ahead with exploring for offshore energy resources despite the collapse in 2017 of talks to end the country’s decades-long division. That has angered neighbouring Turkey.

Turkish President Recep Tayyip Erdogan has also warned foreign energy companies not to “overstep the mark” in disputed waters off the coast of the divided island.

Last month, ExxonMobil and Qatar Petroleum began test drilling for hydrocarbons offshore Cyprus despite Turkey warning international firms against such moves.

The Italian state-controlled ENI and France’s Total are also heavily involved in exploring offshore Cypriot oil and gas. In November, Total and Eni also submitted a joint bid for another license to explore and exploit hydrocarbons for unclaimed block 7 of Cyprus’ exclusive economic zone.

Energy Minister George Lakkotrypis said that, due to its geology, firms expressed an interest in block 7 and so it was decided to invite companies, that already have licences in neighbouring offshore blocks.

Nicosia decided to proceed with exploiting block 7 due to “very specific geological reasons” that have to do with preliminary a discovery in block 6 of Cyprus’ EEZ, announced by ENI in February.

ENI is the operator of Block 6 with a 50% participation interest and Total has the other 50%.