Israeli Oil Companies Join Oil Search in Cyprus

On Monday, Israel-based oil firms Avner Oil Exploration L.P. as well as Delek Drilling bought nearly one-third of the oil and gas drilling rights on blocks near the southern shores of Cyprus.

According to Neoclis Sylikiotis, Commerce Minister, the firms’ decision to invest in oil field exploration in the area could signal the beginning of a political and economic alliance between his country – Cyprus – and Israel.

Cyprus first began domestic oil exploration about six years ago.  It auctioned off block 12 to Noble Energy Incorporated, which initiated oil exploration in the area.

Before the close of 2011, Noble’s efforts paid off when it struck more than 220 billion cubic meters of natural gas.  This is enough to feed domestic demand in the long term.  Moreover, it could help put Cyprus among the ranks of lead countries supplying gas to the European market before 2020.

Experts place the value of this find to about 100 billion euros.

Israel has huge gas deposits located in the Tamar and Leviathan fields.  Both Delek and Avner hold majority claims over these assets.

Aside from the contract with the two Israeli firms, Cyprus had earlier clinched a deal with France’s oil firm Total.  The French company will explore for oil and gas on blocks 10 to 11 located off the southern shores of Cyprus.

Apparently, Cyprus’ collaboration with foreign oil firms could be part of its grand plan of becoming one of the leading energy centers in the region.

Turkey, however, has been opposing Cyprus’ energy exploration that extends to the breakaway Northern Cyprus. Turkey views this as unlawful.  It has threatened to leave out oil firms participating in the unlawful drillings from Turkey’s own oil investment programs.

According to Sylikiotis, the U.S., France, Italy, and Israel’s involvement in Cyprus’ search for hydrocarbon energy could be a boon since their mere presence may offer some “defense” under the circumstances.

In the early 70s, Turkish armies attacked Cyprus’ northern region; after which, Turkey was able to take control of said region, causing a split among Cyprus’ populace.

Per estimates, Cyprus’ 13 oil blocks in its EEZ could hold as much as 60 trillion cubic feet of gas.  Cyprus is pinning its hopes on this wealth to help it recover from its current economic slump.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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