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Cyprus Says Makes Strides In Offshore Energy Search

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Cyprus Says Makes Strides In Offshore Energy Search

NISCOSIA - Cyprus said Wednesday it was making good progress with a second round of licensing for exploratory drilling aimed at exploiting offshore oil and gas deposits.

In October drilling permits, subject to negotiation, were approved for blocks 2, 3, 9 and 11, and on Wednesday block 10 was also added to the list.

"Negotiations with applicants for blocks 2 and 3 have made significant progress while progress has been made in negotiations for block 11,"said government spokesman Stefanos Stefanou.

However, talks with preferred bidders for block 9--a French-Russian tie-up involving Total ENP Activities and Novatek--have ceased, he said.

He said the cabinet had decided direct negotiations should end as they had been "unsatisfactory," and they would now move on to ENI SpA and Korea Gas Corp.

The government is also negotiating a deal with the same Italian-South Korean partnership for blocks 2 and 3.

France's Total SA is still in the running to exploit block 11 on its own and the government has also decided to negotiate directly with it for the adjacent block 10.

A launch for tenders for a second licensing round that ended in May covered 12 blocks. A decision on the remaining blocks will be made gradually.

US firm Noble Energy Inc. was awarded Block 12 and announced last year that it discovered gas reserves of up to 8 trillion cubic feet (226.5 billion cubic metres), which has an estimated value of 100 billion euros ($129 billion).

This would satisfy the island's domestic gas needs for decades.

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

Cyprus hopes its energy bonanza can eventually help pull it out of recession as it seeks a European Union bailout.

Turkey has protested strongly against the Cyprus government's offshore energy search, branding it illegal and retaliating by beginning its own exploratory drilling off the breakaway north.

Ankara has warned that companies involved in the Cyprus process could be shut out of Turkey's energy investment.

Copyright (c) 2012 Dow Jones & Company, Inc.

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