NICOSIA, Dec 28 (Reuters) – Cyprus said on Wednesday an offshore prospect where exploratory drilling is under way contains an estimated 5 to 8 trillion cubic feet (tcf) of natural gas, a first for the island which could make it self sufficient in the commodity for decades.
Based on the exploratory drill by U.S. based Noble Energy the prospect, which lies south of the island, contains a gross mean of 7 tcf of gas, Cypriot President Demetris Christofias said in a statement.
“The discovery of natural gas in the exclusive economic zone of our country opens great potential for Cyprus and its people, which with prudence and in a spirit of collectiveness we will utilize in the service of public interest,” Christofias said.
“New favourable economic prospects have opened for the future of the country,” Christofias added.
It was an auspicious end to a traumatic year for Cyprus which was hammered by ratings agencies for fiscal slippage, shut out of international capital markets and hit by a large munitions blast that destroyed its largest power station.
Its northern neighbour and old rival Turkey has challenged Cyprus’s bid to search for hydrocarbons, saying the island has no jurisdiction. The island was split in a Turkish invasion in 1974 after a brief Greek inspired coup, and Ankara supports a breakaway state in northern Cyprus.
The island, which is run by an internationally recognized Greek Cypriot government, says estranged Turkish Cypriots can benefit from hydrocarbon finds in the context of a political settlement ending decades of division.
Turkey says it plans to conduct its own hydrocarbon surveys off Cyprus. When Noble started its exploratory drilling in September, it sent its own survey vessel to the area.
“We call upon Turkey to show a spirit of peace and reconciliation, (and to) avoid any adventurous acts and provocations which cause problems to (peace) talks and also tension in the Eastern Mediterranean,” said Christofias.
Greek and Turkish Cypriot sides have been engaged in peace talks under United Nations auspices for decades. The latest round of talks began in 2008.
Turkish Cypriots reacted coolly to the announcement.
“In our view, the Greek Cypriots should be investing more in the negotiations, and not in things that cause further disputes,” said Kudret Ozersay, chief aide to Turkish Cypriot leader Dervis Eroglu in peace talks.
The Cypriot block, known as “Block 12”, covers approximately 40 square miles and will require additional appraisal drilling prior to development.
It was a “significant” discovery, Noble Energy Chairman and CEO Charles D. Davidson said in a statement. Noble has also reported significant natural gas discoveries off neighbouring Israel.
“This is the fifth consecutive natural gas field discovery for Noble Energy and our partners in the greater Levant basin, with total gross mean resources for the five discoveries currently estimated to be over 33 Tcf.
“This latest discovery in Cyprus further highlights the quality and significance of this world-class basin,” Davidson said.
The gross mean resource range of 5-8 tcf could be a conservative estimate, U.S. based brokerage Sterne Agee said.
“If we use prior news releases on the Tamar and Leviathan discoveries as a guide, we believe that today’s initial resource report by Noble is likely to be conservative, and we would not be surprised to see significant upward revisions in the next couple of years as the project nears production,” Sterne Agee analyst Michael McAllister said in a note. Leviathan and Tamar are two fields off Israel.
Proven discoveries could make Cyprus, which now relies almost exclusively on imported and expensive fuel oil to fire its energy grids, self sufficient for decades. The island has estimated needs in gas of 1 billion cubic metres (bcm) per year. (Editing by James Jukwey)