Cyprus to Expand Energy Search Despite Turkey

NICOSIA (Dow Jones Newswires), Nov. 23, 2011

Cyprus announced Wednesday that it is forging ahead with a second round of licensing to exploit oil and gas deposits off its shores despite the strong objections of Turkey.

"The commerce minister (Praxaoula Antoniadou) has been authorized to take all the necessary steps to move ahead with official publication of the notice of the second round of licensing in respect of all research blocks in the Exclusive Economic Zone of Cyprus," government spokesman Stefanos Stefanou told reporters.

He said the launch of the tendering process would take about six weeks to prepare, with interested candidates then given three months to express an interest in exploiting the remaining 11 blocks inside the island's delineated economic zone (EEZ).

After evaluation, a shortlist of candidates for exploration permits will be drawn up and submitted to the cabinet to decide who gets the final approval.

U.S. company Noble Energy is currently test drilling for possible reserves in Block 12, 180 kilometers (115 miles) off the island's south coast. The firm secured the first exploration license issued in 2008.

Ever since, Turkey has protested strongly against the Cyprus government's search for offshore oil and gas, branding it "illegal".

Unlike the rest of the international community, Ankara does not recognize the government in Nicosia, which it brands a Greek Cypriot administration.

Instead, it is the only government in the world to recognize the breakaway state which Turkish Cypriot leaders declared in the north of the island in 1983.

"With today's decision, the (Cyprus) government stresses, once again, its determination to exercise, always in accordance with international law, its sovereign rights in the EEZ of the Cyprus Republic, " Stefanou said.

A defiant Cyprus President Demetris Christofias had said Monday that the island's offshore oil and gas search would carry on regardless of the hostile reaction from Ankara.

He made the vow after touring Noble's Homer Ferrington platform for the first time since the Texas firm began exploratory drilling for gas at the end of September.

Initial estimates by Noble Energy predict between 3 trillion and 9 trillion cubic feet (between 85 billion and 255 billion cubic meters) of gas locked under the sea bed--less than the government's preliminary estimate of 10 tcf.

But even a find of less than 10 tcf would meet the island's domestic gas needs for decades.

Results from Noble's test drilling are expected to be ready in mid-December.

Media reports predict there could be greater riches, not only of gas but also of oil, in the blocks adjacent to Block 12.

Turkey has repeatedly called on the Cyprus government to postpone its gas exploration, saying the Greek Cypriot side has no right to explore while the island remains divided as it excludes the Turkish Cypriot north.

Christofias says that any oil or gas finds will be used for the benefit of all Cypriots and that Turkey's own retaliatory exploration moves in the region are "outside international law."

Ankara Wednesday signed an oil and gas exploration deal with Shell that could include the region off Cyprus.

Cyprus has been divided along ethnic lines since 1974, when Turkish troops invaded and occupied its northern third in response to an Athens-engineered coup in Nicosia aimed at union with Greece.

Both the European Union and the United Nations have expressed concern that the energy row could derail efforts to re-unify the island--an E.U. member--which are faltering after three years of painstaking UN-brokered negotiations.

Copyright (c) 2011 Dow Jones & Company, Inc.


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