Cyprus Launches Oil Exploration Bids

NICOSIA Feb.15, 2007 (AP)

Cyprus' government opened a bidding process Thursday to license offshore oil and gas exploration, despite strong objections by Turkey.

The venture has threatened to revive tension in the region, where contested sea boundaries also exist between neighbors Greece and Turkey.

The first round of licensing involves 11 offshore areas totaling around 60,000 square kilometers in the south, southeast and southwest of the island, the government said.

"So far, many companies from many different countries have shown interest," Trade and Industry Minister Antonis Michaelides said. They include major companies involved in oil exploration and drilling, he said, but didn't give other details.

Norwegian company PGS Geophysical AS already has completed a two-dimensional seismic survey of the area - covering some 70,000 square kilometers to the south, southwest and southeast of Cyprus.

Turkey had warned Cyprus not to search for oil and gas in the area, where it said it also has legal rights and interests. Ankara insists Turkish Cypriots should have a say in the island's oil and gas rights.

Turkey does not recognize the Greek Cypriot government on the divided island, and backs a breakaway Turkish Cypriot state in the north, where it maintains 35,000 troops.

Cyprus signed a deal with Lebanon last month to mark out sea boundaries and facilitate future oil and gas exploration. It has a similar deal with Egypt. Turkey has warned both countries not to proceed with the deals.

But Egyptian Petroleum Minister Amin Sameh Samir Fahmy, who attended Thursday's ceremony, promised close cooperation with Cyprus.

"I assure you that the Egyptian Ministry of Petroleum is fully committed to work very close with the Cypriot side, offering all necessary support and experience, to help Cyprus achieve its oil and gas future plans and objectives," Fahmy said.

French petroleum consultant Beicip-Franlab, which analyzed the seismic survey data, said it was encouraged by the results.

"We are pretty sure that there are active petroleum systems presently in existence in the area," Beicip-Franlab's Lucien Montadert said.

The bidding process ends July 16.

Copyright (c) 2007 Dow Jones & Company, Inc.

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