ExxonMobil Signs for Drilling Rights Off Cyprus

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By MarEx 2017-04-07 16:49:30

ExxonMobil has signed a new agreement with Qatar Petroleum and the government of Cyprus for exploration and production in offshore Block 10, within Cyprus' EEZ. 

The block was the most hotly contested of three areas auctioned off in Cyprus' third offshore licensing round, with Eni/Total, ExxonMobil/Qatar and Statoil all competing for the license. Block 10 is located across the EEZ demarcation line from Egypt's giant Zohr gas field, the largest in the Mediterranean at 30 trillion cubic feet of reserves. It is to the west of Cyprus' Aphrodite gas field, which is estimated to contain up to six trillion cubic feet. 

ENI and Total were favored to win the bid thanks to their established ties in Cyprus and their experience exploring in the waters near Block 10. However, Cypriot oil and gas commentator Abboud Zahr suggested that ExxonMobil was a strong competitor due to its financial resources, its technical abilities and its political influence abroad.

“The strategic significance of ExxonMobil’s and Qatar Petroleum’s presence in the EEZ of Cyprus and, for the first time, in the Eastern Mediterranean region, is immense, especially when considering their financial depth and calibre of expertise in the field of hydrocarbons and LNG," said Cypriot energy minister Yiorgos Lakkotrypis in a statement Tuesday. Lakkotrypis noted that the agreement also included new opportunities for education for Cypriot workers. 

ExxonMobil and Qatar Petroleum will acquire seismic data on the block and drill two exploration wells within the license period. Drilling is set to begin in 2018.

Cyprus’ newfound energy wealth has significant geopolitical importance: if exported to the north, its gas could help Europe reduce its dependence on Russian supplies. In addition, the promise of new revenue could lead to a long-sought reunification of the island, which has been divided between ethnic Greek and Turkish administrations since the 1980s.