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Eastern Macedonia and Thrace Institute of Technology
Dept. of Petroleum and Natural Gas Engineering
MSc in Oil & Gas Technology
“Oil Trading”
“Cyprus: An update on gas exploration and reserves”
Antoniadis Stelios
Eleftheriadis Leonidas
Pitatzis Thanos
Trevezas Simon
Supervisor: N. Kontinakis
January 2014

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Table of Contents
1. Introduction................................................................................................................. 3
2. Cyprus Natural Gas Reserves...................................................................................... 4
2.1 Levant basin energy potential amid political instability ............................................ 4
2.2 Aphrodite gas field...................................................................................................... 6
2.3 Update estimation........................................................................................................ 7
3. Cyprus 2nd Offshore Licensing Round....................................................................... 8
3.1 Block 9 timeline .......................................................................................................... 8
3.2 Blocks 11, 12 timeline................................................................................................. 9
3.3 The remaining blocks.................................................................................................. 9
3.4 Levant basin potential sources of natural gas until 202020
....................................... 10
4. Cyprus Development Options................................................................................... 10
4.1 Strategic location supports multiple development scenarios21
.................................. 10
5. Conclusion................................................................................................................. 12
References ........................................................................................................................ 14

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1. Introduction
Cyprus is the third largest island country and a member of the European Union1
. It is
located in the Eastern Mediterranean in a geostrategic position because it is Europe’s last
frontier and a crossroad between Europe, Asia and Africa. Since 1974 Turkey’s invasion,
the island is divided into Republic of Cyprus and the Turkish Kibris Cumhuriyeti2
.
Despite the fact of this unique situation, Cyprus government has managed to overcome
the political problems and to develop a strong economy with an average annual growth
rate of 0,3%3
. The latest financial achievement was the adoption of Euro as a national
currency in 2008. Unfortunately, in 2012, the island was affected by the Euro zone
financial and banking crisis and forced to proceed in immediate structural changes.
According to recent information Cyprus has been a tax heaven country for lot of
businesses but beside that, tourism and shipping industry has been a valuable economic
factor for the overall economy4
. Nowadays, the government puts effort in gaining
revenues on development of their promising fossil fuel resources. In 1982, Cyprus signed
the UN Convention on the Law of the Sea which gave them the right of establishing and
determining an Economic Exclusive Zone. Generally, this zone gives the opportunity to
every state to expand to a distance of 200 nautical miles out of its coastal baseline, thus
to legally explore the continental shelf5
. Cyprus through the EEZ, has managed to change
the local situation and has turned the wider landscape to its advantage by exploiting its
mineral wealth in a geostrategic manner. This is sufficient enough to promote the Greek
EEZ to follow their example6
.
Specifically, significant quantities of natural gas have been discovered on the island’s
territorial sea. Research for hydrocarbon resources began in 1938, during British
occupation, by Iraq Petroleum Company Ltd and continued also by other companies such
as Oil Prospectors Ltd (1947), Forest Oil Corporation (1957), Delta Exploration (1970),
Sefel Geophysical Ltd (1975) and Soviet Science Academy (1985). The main purpose
was to evaluate and analyze the seabed view and produce seismographic and geological
research. The outcome was impressive mostly on the north side and promising on the
south. Moreover, the historical information concerning the geological research has
revealed that Cyprus is placed among two areas (basins) which have produced already
tremendous amounts of oil and gas for Egypt and Israel7
.

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Source: http://www.hitandrun.gr/steit-ntipartment-ipa-anagnorizoun-dikeoma-tis-kiprou-
gia-tin-aoz/
2. Cyprus Natural Gas Reserves
2.1 Levant basin energy potential amid political instability
In 2010, the US Geological Survey (USGS) estimated that the Levant Basin, one of the
eight basins at the Eastern Mediterranean region, may contain natural gas resources
exceeding 3455 billion cubic meters (bcm), comparable to the reserves of Iraq8
. While
recent discoveries of large hydrocarbon resources have redefined the energy landscape in
the Middle East and have entailed a natural gas increase of 27 % of the region’s energy
mix from 1990 to 2009, the Israeli gas fields Tamar and Leviathan, discovered in 2009
and 2010 respectively, transformed the Levant Basin into a potential exporter region.
Even though the total proved reserves of natural gas in the Levant Basin (515 bcm) are
insignificant relative to global levels, recent discoveries in offshore waters of Cyprus and
Israel in the Levant Basin have pushed the estimated recoverable natural gas resources in

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the area to over 1076 bcm. Future explorations may raise the gas reserves in the short
term9
.
Source: Own elaboration based on calculations from EIA data (2014)
According to the International Energy Agency (IEA), prospects for increasing production
continue to be hampered by political instability. Long-standing historical grievances
across the Eastern Mediterranean, such as the Israeli-Arab conflict, cast a long shadow
over the project. Regional political rivalries are made more acute by political disputes
regarding the validity of maritime Exclusive Economic Zones (EEZ) boundaries10
.
Past and present rivalries in the Middle East are hindering the exploration and production
of gas in the East Mediterranean, causing divisions within the countries and meanwhile,
the Levant Basin gas potential under the Mediterranean remains unexploited. Israel,
Cyprus and Turkey have recently shown that economic considerations are beginning to
prevail over security and political concerns in the reshaping of global and regional
alliances. In addition in this dispute, timing is a key element. Starting in 2018-20,
Australia, Mozambique, the United States, Canada and Russia are all planning to export
gas to Asia. If exploration is delayed by the ongoing disputes, Israel and Cyprus – the

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most advanced countries when it comes to gas exploration – will be forced to sell their
gas at a lower price9
.
2.2 Aphrodite gas field
Aphrodite gas field is an offshore gas field off the southern coast of Cyprus, located at
the exploratory drilling block 12 in the country's maritime Exclusive Economic Zone.
Located 34 kilometers (21 mi) west of Israel's Leviathan gas field, block 12 is believed to
hold 3.6 to 6 trillion cubic feet (100×109 to 170×109 m3) of natural gas11
.
Noble Energy received the concession to explore block 12 in October 2008. In August
2011, Noble entered into a production-sharing agreement with the Cypriot government
regarding the block's commercial development. Sources in Cyprus indicated in mid-
September that Noble had commenced exploratory drilling of the block.
Cyprus demarcated its maritime border with Egypt in 2003 and with Lebanon in 2007.
Cyprus and Israel demarcated their maritime border in 2010. Turkey, which does not
recognize the border agreements of Cyprus with its neighbors, threatened to mobilize its
naval forces if Cyprus proceeds with plans to begin drilling at Block 12. Cyprus's drilling
efforts have the support of the United States, European Union, Russia and United
Nations, and on September 19, 2011 drilling in Block 12 began without any incidents
being reported. The development of oil and gas resources in the Cypriot Exclusive
Economic Zone (EEZ) abide to the UN Convention of the Law of the Seas (UNCLOS)
which the Republic of Cyprus ratified in 1988.The United Kingdom also has a claim on
the area resulting from its sovereignty over two base areas in Cyprus. The treaty
establishing the Republic of Cyprus, specifically excluded any Cypriot claim to the two
areas adjacent to the bases.
For the Cyprus population the Aphrodite gas field can boost the local economy to counter
rising unemployment. According to Noble Energy, a total gross deep oil potential is 3.7
billion barrels (590×106 m3). The field has a gross mean average of 7 trillion cubic feet
(200 billion cubic meters) of natural gas with an estimated gross resource range of 5–8
trillion cubic feet (140×109–230×109 m3)12,13
.

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2.3 Update estimation
Delek Group and Avner Oil and Gas, subsidiaries of Delek Drilling, reported a raise in
their estimate for the amount of natural gas in the Aphrodite field located in Block 12 of
Cyprus’ Exclusive Economic Zone to 4.54 Tcf14
. The field, discovered by Noble Energy
in 2011, was previously estimated to hold between 3.6 to 6 Tcf of gas, with a mean of 5
Tcf15
.
Source: http://www.isn.ethz.ch/Digital-Library/Articles/Detail/?id=165423

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Cyprus Offshore Hydrocarbon Exploration Blocks (Block 12 is in Yellow)
Source: Cyprus Gas News (2013c).
3. Cyprus 2nd Offshore Licensing Round
Eni was awarded the three blocks whilst leading a consortium formed by Eni (80%, as
operator) and the Korean company Kogas (20%) in an international competitive tender
(Cyprus 2nd Offshore Licensing Round) which was completed in May 201216
. Total was
awarded with two blocks, the blocks 11 and 12 and is the operator with 100% share17
.
3.1 Block 9 timeline
In September 2014, the Saipem 10000 drillship has started drilling operations to
Onasagoras Field. The Cypriot Energy Ministry has reported that commercially
exploitable natural gas reserves were not found by the ENI-KOGAS partnership at the
first exploratory drill at the offshore Onasagoras field, located in Block 9 of the Cyprus
exclusive economic zone which brought disappointment in Cyprus. According to an
official announcement, the joint venture will complete drilling within the next few days
and move on to the Amathusa field, also located in block 9. “Drillship Sapiem 10000 will
continue as normal, the exploration program that started last September,” the ministry
said18
.

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January 2015, The Saipem 10000 drillship will start drilling operations to Amathusa
Field.
3.2 Blocks 11, 12 timeline
French Total expects to start drilling in Cyprus’ EZZ in mid-2015. The French company
is associated with the block 11. The recent trading regards also block 10, which abuts to
the block 11. If combine the data of plot 12 where explores an American company, the
picture is as follows 10-11 are in touch with 12 which also touches to block 9 complex,
the 9-2-3, so there is a sequence 10-11-12-9-2-3 which osculates on all EEZ in which
Cyprus has signed agreements, i.e. EEZ’s of Egypt, Israel and Lebanon, which is a
bidirectional amplification in 2-gang level. Now the plot 12 is not anymore remoted from
Cyprus but is united with, through the blocks 9 and 2. From energy’s side is not
accidental that the plots 9 and 11 touch 12 where the existence of gas is a fact.
French company Total expects to start drilling in Cyprus’ Exclusive Economic Zone
(EEZ) in mid-2015, Managing Director of Total E & P Cyprus Jean-Luc Porcheron has
said. Jean-Luc Porcheron was speaking during a presentation organized by the Cyprus-
French Business Association entitled “Total in Cyprus: A long term perspective”.
He said that “this is just the beginning of exploration in Cyprus”, noting that “we have a
lot of work to do before drilling which means that we will probably not be able to drill
before mid-2015”19
.
3.3 The remaining blocks
The other blocks in Cyprus EEZ do not have for now operators, the Cyprus government
plans to declare a 3nd and a 4nd Offshore Licensing Round for the remaining blocks
(another 5 plots the 5,6,7,8, and 13).

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3.4 Levant basin potential sources of natural gas until 202020
Source: Analysis, I., The prospect of Eastern Mediterranean gas production: An
alternative energy supplier for the EU ? , (April 2014).
4. Cyprus Development Options
4.1 Strategic location supports multiple development
scenarios21
• Onshore LNG Facility at Vasilikos with Domestic Supply Component
• Floating LNG
• Pipeline to Egypt Onshore LNG Facilities
• East Med Pipeline

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Source: http://www.defencegreece.com/index.php/2012/04/southeastern-mediterranean-
hydrocarbons-a-new-energy-corridor-for-the-eu/

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5. Conclusion
Cyprus enacted the EEZ since 2004 and has achieved three agreements with Egypt,
Lebanon & Israel. There is still a missing agreement with Greece. Cyprus with the 2 nd
lending round managed to attract 15 companies-ventures and these are candidates for
nine of the 12 blocks. The block 12 with the famous Aphrodite deposit is at the limit of
the EEZ of Cyprus and the EEZ of Israel9
. The company NOBLE has signed different
contracts with Cyprus and Israel for this deposit.
Cyprus managed to reinforce substantially by gathering foreign countries in its EEZ. The
Italian ENI and the Korean KOGAS came for blocks 2 & 3, the French-Russian
consortium TOTAL & E&P Activities, also the two Russian NOVATEC & GP (Global
Resources) for the block 9 and the French TOTAL company for the block 11. NOBLE
company with the Aphrodite deposit will turn Cyprus into exporting country for gas, that
is why accomplished new drilling process in 2013. They also consider Cyprus and Israel
for Onshore LNG- FLNG in Tamar & Leviathan deposits22
. Based on the above
mentioned, the block 10 and 11 are in touch with 12 which also touches the block 9
complex (the blocks 9-2-3), so there is a sequence 10-11-12-9-2-3 which osculates on all
EEZ in which Cyprus has signed agreements17
.
Because of the EEZ, Cyprus already has won 23 million Euros for seismic surveys, 150
million Euros for the bonus signature on blocks 2, 3, & 9 from the consortium of Italy
and Korea and now 12 million Euros for each block by the French company, meaning 24
million for blocks 10 & 11. In addition, there is a written report for the 700m drilling
that TOTAL is going to do, so the research is not just about the natural gas but for oil
too, which makes it even easier for Cyprus to succeed an economic recovery. Also, the
percentage of Cyprus in earnings after the recoverable expenses would be closed up to
70%. Moreover, due to the contract the companies should pay signature bonus, which
means that Cyprus will have immediate revenue with just a signature.
Finally, Cyprus through the EEZ & its hydrocarbons has managed to change the local
situation and has turned the wider landscape to its advantage by exploiting its mineral
wealth in a geostrategic manner23
. Cyprus has resisted the Annan plan that would have
removed every right to establish EEZ and joined the EU. Thanks to their political vigour,

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they established EEZ and isolated Turkish threats. This political advantage in comparison
with the international company’s ability to influence the political issues, Cyprus has a
great opportunity to resolve their dispute with Turkish Cypriot side.

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References
1. BBC News - Cyprus country profile. Available at:
http://news.bbc.co.uk/2/hi/europe/country_profiles/1016541.stm. Accessed
December 29, 2014.
2. BBC News - Cyprus profile - Timeline. Available at:
http://www.bbc.com/news/world-europe-17219505. Accessed December 29, 2014.
3. Cyprus GDP Growth Rate | 2001-2014 | Data | Chart | Calendar | Forecast.
Available at: http://www.tradingeconomics.com/cyprus/gdp-growth. Accessed
December 29, 2014.
4. Cyprus one year on: Injured island | The Economist. Available at:
http://www.economist.com/news/finance-and-economics/21598649-bail-out-
working-bail-isnt-injured-island. Accessed December 29, 2014.
5. e-typos.http://www.e-typos.com/files/1/2014/11/21/ELTK 02-11-14.pdf. Accessed
December 18, 2014.
6. ΑΟΖ της Κύπρου και αγγλικές βάσεις - Ν. Λυγερός. Available at:
http://www.lygeros.org/articles?n=7977&l=gr. Accessed December 22, 2014.
7. Στέιτ Ντιπάρτµεντ: Οι ΗΠΑ αναγνωρίζουν το δικαίωµα της Κύπρου για την ΑΟΖ
- Hit&Run. Available at: http://www.hitandrun.gr/steit-ntipartment-ipa-
anagnorizoun-dikeoma-tis-kiprou-gia-tin-aoz/. Accessed December 30, 2014.
8. Petroleum W, Project R, Sub-salt L, Margin L. Assessment of Undiscovered Oil
and Gas Resources of the Levant Basin Province , Eastern Mediterranean.
9. Analysis I. The prospect of Eastern Mediterranean gas production : An alternative
energy supplier for the EU ? (April 2014).

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10. Report I, Options PD. Interim Report for the Study Natural Gas Monetization
Pathways for Cyprus Economics of Project Development Options.; 2013.
11. Report E. APHRODITE ’ S GIFT : CAN CYPRIOT GAS POWER A NEW
DIALOGUE ? TABLE OF CONTENTS EXECUTIVE SUMMARY
...................................................................................................... i. 2012;(April).
12. Offshore Cyprus. Available at:
http://www.mcit.gov.cy/mcit/mcit.nsf/All/F35CAD9F4226E424C225771B00546F
25/$file/presentation_OTC 2011.pdf. Accessed December 30, 2014.
13. Noble Energy Announces Significant Natural Gas Discovery Offshore Republic of
Cyprus -- HOUSTON, Dec. 28, 2011 /PRNewswire/ --. Available at:
http://www.prnewswire.com/news-releases/noble-energy-announces-significant-
natural-gas-discovery-offshore-republic-of-cyprus-136305648.html. Accessed
December 30, 2014.
14. Henderson S. MEDITERRANEAN PAPER SERIES 2013 NATURAL GAS
EXPORT OPTIONS FOR ISRAEL AND CYPRUS. 2013.
15. Israeli partners increase Aphrodite’s natural gas estimates. Available at:
http://www.naturalgaseurope.com/estimates-aphrodite-increased-cyprus. Accessed
December 30, 2014.
16. Scaroni P. Eni 2014 - 2017 Strategic Plan Growing cash generation underpins
shareholder returns. 2014:2014-2016.
17. Directive EC, Gazette O, Journal O, Union E. YPRUS; Drilling for natural gas
reserves. 2009:1-4.
18. Dissapointment from the latest drilling in the East Mediterreanean. Available at:
http://www.naturalgaseurope.com/onasagoras-eni-kogas-cyprus-block-9. Accessed
December 30, 2014.

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19. Cyprus Expat | Blog: French Oil Company Total Expects To Start Drilling In
Cyprus EEZ In 2015. Available at:
http://www.cyprusexpat.co.uk/blog/read/id:4563/french-oil-company-total-
expects-to-start-drilling-in-cyprus-eez-in-2015. Accessed December 30, 2014.
20. Report MT. Modelling the demand and supply of natural gas from Cyprus and
Israel. 2012.
21. hydrocarbon. 2011;(November).
22. Basin L. Overview of oil and natural gas in the Eastern Mediterranean region
Geology. 2013;2013.
23. Faustmann H, Reichberg GM. Hydrocarbons : Regional Politics and.; 2012.

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