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Mr.Y. Lakkotrypis Optimistic for more natural gas discoveries

Vilifying the Petroleum Industry Mr. Dr. Constantinos Hadjistassou.

CYPGasTech 2014 Cyprus and Israel International Exhibition for Signed an agreement on Oil & Gas Technology hydrocarbons.

#1 MAY 2014 Free magazine

Mr Y. Lakkotrypis Energy Minister optimistic for more natural gas discoveries. Cyprus and Israel Signed an agreement on the exchange and protection of confidential information on hydrocarbons.

Vilifying the Petroleum Industry By Dr. Constantinos Hadjistassou

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Advertise Here 4. Address by the Minister of Energy. Mr Y. Lakkotrypis, at the Global Offshore Technology Conference and Exhibition, in Limassol.



6. Cyprus and Israel Signed an agreement on hydrocarbons.

8. Vilifying the Petroleum Industry The latest article of Mr. Dr. Constantinos Hadjistassou.

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12. CYPGasTech 2014 1st International Exhibition for Oil & Gas Technology, Equipment, Supplies and Services

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Address by the Minister of Energy, Mr Y. Lakkotrypis, at the Global Offshore Technology Conference and Exhibition, in Limassol. Optimistic for more natural gas discoveries. I feel truly honoured to be joining you today and I wish to thank the organisers for giving me the opportunity to address today’s Global Offshore Technology Conference and Exhibition, an event which focuses on the latest market and technology trends related to the exploration, drilling, production, processing and marketing of hydrocarbons in our region. I am confident that the views and suggestions of the distinguished speakers as regards both the energy developments in general, as well as the energy strategy in Cyprus and the broader Eastern Mediterranean region, will prove to be useful tools for setting our next steps. There are some basic elements that come to mind when we think about Cyprus: an island state in the Eastern Mediterranean, at the crossroads of Europe, Asia and Africa, a member state of the European Union at its south-eastern corner, a country affected by its historically turbulent neighbourhood, an island recently blessed, together with its neighbours, with the discovery of hydrocarbons, and, sadly, the last divided EU member state. The very promising potential of hydrocarbon resources in the Eastern Mediterranean was assessed by the US Geological Survey in 2010. For the Levantine Basin, a mean of about 1.7 billion barrels of recoverable oil and a mean of 122 Tcf of recoverable natural gas were estimated, whereas for the Nile Delta Basin the corresponding estimates rose to a mean of about 1.8 billion barrels of recoverable oil and a mean of 223 Tcf of recoverable natural gas.

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Besides Cyprus, which I will discuss in a minute, as of today nearly 40 Tcf of natural gas have been discovered in offshore Israel, and, according to Lebanese officials, preliminary surveys in Lebanon indicate reserves of about 30 Tcf of natural gas. Moreover, there are encouraging indications for oil discoveries in the offshore area of Cyprus. It is therefore evident that the Eastern Mediterranean is quickly becoming a new and very promising frontier region for oil and gas production. Following the first licensing round in 2007, Cyprus signed an Exploration and Production Sharing Contract with Noble Energy International Ltd, granting them an exploration license for Block 12. Israel’s Delek and Avner also joined this license in February 2013. In February 2012 a second licensing round was launched. As a result, Cyprus entered into another five Exploration and Production Sharing Contracts, granting three exploration licenses to Eni and KOGAS for Blocks 2, 3 and 9, in January 2013 and two exploration licenses to Total E&P Cyprus for Blocks 10 and 11, in February 2013. December 2011 was a milestone month. The result of the first exploration well in Block 12 showed a significant natural gas discovery of 5 to 8 Tcf, with a mean gross estimate of 7 Tcf. The subsequent appraisal process in October 2013, confirmed the presence of an estimated gross resources of the field in the range of 3.6 to 6 Tcf of natural gas, with a mean of approximately 5 Tcf. The Aphrodite structure in Block 12 represents the third largest field discovered to date in the deepwater Levantine Basin. The exploration activity will continue in 2014, with one more exploration well for gas in Block 12 and possibly another appraisal well in the Aphrodite field.

At the same time, exploration activities are also well underway in the other five licensed Blocks and the first exploration drilling is expected in the third quarter of 2014. We are, in fact, cautiously optimistic for further discoveries, since the preliminary evaluations indicate promising hydrocarbon potential. These developments are today of paramount importance for Cyprus, taking into consideration the difficulties that our country faces as a result of the economic crisis. No doubt, the existence of hydrocarbon resources in the Exclusive Economic Zone of Cyprus can offer a path back onto the prosperity track. Based on the originally estimated mean of 7 Tcf of recoverable gas resources in the Aphrodite field in December 2011, a decision was made to proceed with the construction of an onshore LNG terminal, with initially one LNG Train of 5 million tons per annum. However, given the recent results of the appraisal well, showing lower estimates of resources, we were required to examine how the viability of the LNG project can be retained. The Government of Cyprus is convinced that the onshore LNG remains the best strategy forward. The global demand for LNG has been growing three times faster than for gas supplied through pipelines and increasing numbers of countries across the world are becoming LNG importers. Its inherent flexibility enables it to reach premium markets irrespective of their location. Moreover, it offers reduced commercial risks as it allows capturing higher returns across the project’s life.

It is evident that a scalable LNG export terminal will bring by far the greatest overall economic benefits to Cyprus and is the most suited for multiple discoveries as it can be easily expanded. It also opens up the way for Cyprus to become an energy hub in the Eastern Mediterranean and provides a secure option for the export of gas reserves from neighbouring countries. From a geopolitical perspective, a Cyprus LNG terminal can be a hub for regional cooperation and dialogue between the countries of the Eastern Mediterranean, while at the same time it can serve as a direct link between the region and the EU. After all, Cyprus, that has always maintained good relations with most of the countries in the region, can play a pivotal role in achieving this goal. Dear participants, In order for the peoples of our region to benefit from their newly found hydrocarbon wealth, it is important to create conditions that permit exploration and production to go ahead, in parallel with efforts to overcome the long-lasting political conflicts in the area. We are in fact extremely confident that the long elusive vision of regional peace and prosperity in the Eastern Mediterranean can finally be achieved through cooperation in hydrocarbons development and to this end we remain firmly committed.

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Cyprus and Israel signed an agreement on the exchange and protection of confidential information on hydrocarbons.

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Cyprus and Israel signed on Monday an agreement on the exchange and protection of confidential information on hydrocarbons discovered in Block 12 in Cyprus’ Exclusive Economic Zone (EEZ) and in its adjacent Block Ishai in Israel’s EEZ. The agreement was signed by the Deputy Permanent Secretary of the Cypriot Ministry of Foreign Affairs Ambassador Tasos Tzionis and the Ambassador of Israel Michael Harari.

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Vilifying the Petroleum Industry By Dr. Constantinos Hadjistassou Recently a series of articles appearing in the press and on the web have dealt with the “industrialisation” of Larnaca’s harbour. It all culminated in a demonstration by a group of Larnaca residents outside the harbour demanding the removal of the exploratory drilling facilities that are being planned there. Observing these events one came away with the impression that ordinary people are not exactly aware of what to expect, nor do they seem to have been properly informed. Contributing to this lack of awareness were the news stories that spoke of “fait accompli” and warning of the health risks posed to local residents, as well as the inadequate information provided by state policymakers. It’s therefore useful to clarify certain contentious issues. For starters, “industrialisation” is considerably different to the provision of oil field services to corporations that have been granted prospecting and production licences. Without these services it would be impossible to explore for natural gas and oil. But what services are these exactly? What is their ecological footprint and what impact do they have on people’s health? 8 |CyprusGasNews

The exploration stage focuses on the acquisition and processing of seismic and other data. Once the data has been duly processed, the “target location” of the exploratory well is determined. Operating the drill requires a string of other specialised operations such as drilling mud, logging, core sampling, marine risers, supplies (food, water, fuel), remotely operated underwater vehicles (ROV), etc. Nearly all the equipment needs to be stored, serviced, tested and repaired on land. It is then loaded onto support vessels and transported to the drill platform for use. The process and procedure followed during the drilling in Block 12 will be repeated in the other five licensed offshore blocks. This gear will be imported, and will not be manufactured in the harbour. Aside from the emissions arising from the above operations, no serious impact on the environment or people’s health is expected.

One point that needs attention is the composition of the mud used during the drilling of wells. Typically where offshore drilling is concerned, a synthetic drilling fluid is used. The mixing, transport, use, processing and disposal of the mud is governed by strict environmental regulations which corporations are required to faithfully adhere to as they are being monitored by the government granting them the concession. The mud is neutralised on land, adhering strictly to specific procedures which aim to protect the marine fauna and flora as well as to avoid toxic emissions and harmful waste. The same goes for drill cuttings produced during drilling. It is this same procedure that was successfully implemented in Limassol for the A-1 and A-2 wells in the Aphrodite prospect. In practice, the harbour will serve as the companies’ base of operations and workspace where they will store their gear, conduct the necessary tests and provide support to drilling. Hiring of local workers is not expected to be extensive, unless new hydrocarbons finds are made, or natural gas and/or oil fields are developed. What will add value to the Cypriot economy and create new investment and employment opportunities will be the more active engagement in the petroleum industry of foreign but primarily local businesses and universities. Research and development of new

technologies and tools, training, equipment testing, mechanical design, legal services, and trade of petroleum products, are just some of the areas that can help create a revamped and sustainable growth model for our economy – something akin to what occurred in Norway in the 1970s. But for this to happen, we need proper planning and incentives from the government, private initiative but also a streamlining of procedures in order to attract interested parties. Also, society at large would need to get behind the energy corporations. To achieve all the above, however, it is important that the petroleum industry not be vilified in the public mind. Tarnishing an emergent conventional fuels energy sector is fairly easy to do if one is negatively predisposed, for example by citing examples of corruption and environmental impacts in other countries such as Venezuela and Nigeria. Moreover, ignorance and misinformation can also inflict damage. Let us keep in mind, however, that on its own Cyprus is not capable of utilising its natural resources due to lack of technical knowhow and financial prowess. Experience from cases of successful and unsuccessful countries in the management of natural resources teaches us that the engagement of CyprusGasNews| 9

governmental and private business in hydrocarbons gives added value to a country’s GDP, creates employment opportunities and a lot more. It is not enough merely to sell crude oil or natural gas, but rather to also create knowledge and convert this knowledge into products and services through innovation and entrepreneurship.


Wrongly handling hydrocarbons resources can easily shatter the public’s confidence, and lost credibility can be very hard to regain. The dilemmas facing Cyprus are well known in the area of mineral resources. Raising awareness through public hearings, emphasising the benefits and highlighting the challenges, the active participation of social partners, a better grasp of how the petroleum industry works, and the involvement of local authorities and groups in decision-making – these are some of the steps that can help in the social acceptance and growth of the energy sector. Creating a framework for the conversion of non-renewable energy sources into sustainable and long-term economic growth is perhaps the single largest hurdle that we face collectively. The dire economic situation that Cyprus finds itself in, especially with the scourge of unemployment, leaves no room for complacency.

Constantinos Hadjistassou is a lecturer in Marine Hydrocarbon Technologies at the University of Nicosia. Website:

KYRIAKIDES & XENOFONTOS OIL AND GAS LEGAL EXPERTS Kyriakides & Xenofontos Oil and Gas Legal Experts, is a pioneer Oil and Gas Project, run by a Joint Legal Venture, comprised of two major law firms of Limassol and Nicosia: > Nasos A.Kyriakides & Partners (Limassol, est. 2004), led by Nasos A.Kyriakides (LL.B, DI.M, LL.M, MCI Arb.,) is an international business law office specialised in corporate services, banking, finance, M&A and international arbitration. Nasos A. Kyriakides & Partners was recently awarded as “Oil & Gas Law Firm of the Year in Cyprus 2014 by Corporate Intl Magazine. It has been actively involved in transactions with a value of more than EU 4 billion in the banking, agricultural and industrial sector and provided legal consulting for the issuance of Eurobonds, and IPO projects in the London Stock Exchange (AIM) and the Warsaw Stock Exchange (WSE) as well as consultation and assistance in obtaining credit facilities from major international banking institutions, following detailed due diligence procedures and corporate restructuring. > Xenofontos Legal (Nicosia, est. 2008), led by Xenis G.Xenofontos, LLB, LLM is a top litigation and legal consulting firm on all aspects of Cyprus law. It has been involved in major litigation, especially by handling cases at the Supreme Court of Cyprus, on issues of administrative law, human rights, search and seizure, ip law, constitutional law, criminal law and by handling complex civil and commercial law cases in various District Courts. Furthermore it acts as legal advisor and law compliance supervisor for various companies and local authorities. Both firms have extensive experience in contract drafting and reviewing and have participated as legal advisors in various business negotiations. Firm leaders N.A. Kyriakides and X.G.Xenofontos are the only two lawyers in Cyprus, having attended the specialised course “Legal Contracts and International Legal Practice for Oil&Gas”, accredited by the London School of Energy Studies. Website:

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Limassol: the NEW meeting center for the Oil & Gas sector in the East Mediterranean

15-17 OCTOBER 2014, Carob Mill - Evagoras Lanitis Center - Limassol Marina CYPGasTech 2014 exhibition, occurs in Cyprus for the first time, in order to gather and showcase in one event, the latest developments in the Oil & Gas sector such as planning, manufacturing, equipments, management, support, services, training, etc. Furthermore, CYPGasTech 2014 is the only Oil & Gas exhibition in Cyprus dedicated to highlight the major role of Limassol in conjuction with the port and to activate its productive classes in front of the new energy era in East Mediterranean.

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Why to Exhibit in Cyprus-Eastern Mediterranean Limassol is the new hub in the East Mediterranean Showcase your products and technology Explore business opportunities Develop and make lasting relationships with new partners & clients Stay ahead of the competition Raise your company profile “CYPGasTech 2014” welcomes : Oil and Gas operating companies Offshore & Subsea Technology & equipments Seismic, Hydrographic & Survey systems Platforms, Bulk handling systems, Helidecks Drilling equipment Floating Production Systems Marine/Diving equipments & Support Services Oil & Gas transportation systems Offshore LNG systems Pipelines, Installation, Contractors, Control Lines, Inspection & Maintenance Gas processing systems Refining/Petrochemical equipment & systems Fireproofing materials, Fire protection systems Hydraulics and Electromechanical equipments Power Generators Pumps, Compressors, Valves, Actuators, Gauges, Meters, Indicators, Monitors, Instrumentation & Controls, Cables Lifting equipment & Cranes Coatings, Anti-corrosions & Waterproofing materials Electrical products & Lighting equipments 12 |CyprusGasNews

Chemicals, Fluids, & Lubricants Communications systems services, equipments & suppliers Information Technology systems services, equipments & suppliers Engineering and Construction companies LNG, Petrochemical, Chemical planning Management, Consultancy, R&D services Logistics services Port equipments & services Waste treatment LNG & Gas Carrier vessels, Shipyards Natural Gas Vehicles (NGV) HSSE (Health, Safety, Security, Environment) equipments & services, Emergency control systems Services providers Educational programs, Training & Classification services Consultants Oil & Gas Investors Audit & Law Firms Banks, Insurance companies Employment Agencies Media, portal services National/Int’l Trade & Professional Associations For more details about sponsorship / exhibit / participation, please visit or contact V. Zomenos, Director Zomidea Events, T: +357 99722779, E:

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CyprusGasNews May 2014  

Cyprus Gas News Magazine issue 1 for May 2014

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