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Solon Kassinis wista med conference presentation 2012


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Presentation: "Oil & Gas Developments in the Eastern Mediterranean"

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Solon Kassinis wista med conference presentation 2012

  1. 1. Offshore Cyprus:Oil & Gas Developments in the Eastern Mediterranean Solon Kassinis Ministry of Commerce, Industry & Tourism Director - Energy Service Republic of CyprusLe Meridien Hotel, Limassol23 June 2012
  2. 2. Cyprus: Geostrategic Facts Third largest island in the Mediterranean Sea Located at the crossroads of big international energy routes Full member state of the European Union Open services-oriented market economy A strategic hub for business activities in the region Greater Mediterranean region is a market with large potential for oil and gas trading REPUBLIC OF CYPRUS Energy Service – MCIT
  3. 3. Regional Hydrocarbon System: PotentialUndiscovered Oil & Gas Resources in the Eastern Mediterranean Assessment by USGS Levantine Basin Oil: 1.68 bbl Gas: 122 tcf Nile Delta Basin Oil: 1.76 bbl Gas: 223 tcf REPUBLIC OF CYPRUS Energy Service – MCIT
  4. 4. East Med Hydrocarbon System: IsraelLeviathanNatural Gas: 20 tcfOil: ?TaninNatural Gas: 1.1 tcfTamarNatural Gas: 9 tcfProduction: 2013DalitNatural Gas: 0.5 tcfProduction: 2013 REPUBLIC OF CYPRUS Energy Service – MCIT
  5. 5. East Med Hydrocarbon System: Egypt Gas Reserves (EGAS) Mean Annual Increase = 5.2% REPUBLIC OF CYPRUS Energy Service – MCIT
  6. 6. Offshore Cyprus: An Emerging Area A promising regional geological background Very thick sedimentary basins (12-15 km) A great number and variety of “play concepts” for Multiple possible clastics and carbonate Exploration associated to the different tectonic reservoirs and stratigraphic domains 14 plays and many leads of considerable Many attractive major “plays” have been size identified Big hydrocarbon discoveries in the region An efficient regional seal: the Messinian evaporites Geological Cross Section REPUBLIC OF CYPRUS Energy Service – MCIT
  7. 7. Offshore Cyprus: 14 Recognized Hydrocarbon Plays REPUBLIC OF CYPRUS Energy Service – MCIT
  8. 8. Hydrocarbon Exploration Activities: Benefits Enhance the Security of the Energy Supply Enhance the Strengthen Competiveness the Self- of the National Efficiency Economy Hydrocarbon Exploration Activities Reinforce the Diversify the Geostrategic Energy Role of Supply Cyprus REPUBLIC OF CYPRUS Energy Service – MCIT
  9. 9. Offshore Cyprus: A Frontier Exploration Area Deep-water frontier exploration area of about 51,000 km2 (part of Exclusive Economic Zone) Located south of the island of Cyprus 13 Exploration Blocks Promising frontier exploration area with proven potential in the vicinity 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Min. Depth (m) Max. Depth (m) Area (sq. km) REPUBLIC OF CYPRUS Energy Service – MCIT
  10. 10. Geophysical DataMulticlient Seismic SurveysMC2D-CYP2006: 6,770 line km 2DMC3D-CYP2007: 659 sq. km 3DMC2D-CYP2008: 12,200 line km 2D REPUBLIC OF CYPRUS Energy Service – MCIT
  11. 11. Legal & Regulatory Framework The Hydrocarbons (Prospection, Exploration and Exploitation) Law L.4(I) of 2007 The Hydrocarbons (Prospection, Exploration and Exploitation) Regulations of 2007 and 2009 Hydrocarbon Exploration License Granted initially for up to 3 years; ability for two renewals of 2 years each Includes gravity and magnetic surveys, 2D/3D seismic surveys, as well as exploration drilling On each renewal, 25% of the initial area is relinquished In case of a discovery, the licensee has the right to be granted an exploitation license Hydrocarbon Exploitation License Granted for an initial period of up to 25 years; ability for one renewal of up to 10 years REPUBLIC OF CYPRUS Energy Service – MCIT
  12. 12. Legal & Regulatory Framework Model Production Sharing Contract Model PSC to be used in the licensing procedure and concluded between the licensee and the Republic of Cyprus Main terms include: Fundamental Obligations Fiscal Regime Minimum Exploration Work Obligations Cost Hydrocarbon recovery (up to a Work Programs & Budgets max. %) Profit Hydrocarbon sharing % (based on Appraisal & Development Plans “R” factor) Training Obligations Signature and Production Bonus Annual Surface Fees Guarantees Accounting Procedure Zero taxation REPUBLIC OF CYPRUS Energy Service – MCIT
  13. 13. Legal & Regulatory Framework Environment – Health & Safety Republic of Cyprus has carried out a Strategic Environmental Assessment (SEA) to identify, describe and evaluate the likely significant effects on the environmental effects of implementing hydrocarbon exploration and exploitation activities Applicants are bound to follow and comply with the results and recommendations of the SEA Every licensee shall carry out hydrocarbons operations in a proper, safe and workmanlike manner and in accordance with good hydrocarbon field practices and the relevant national legislation Every licensee shall ensure that hydrocarbon operations are conducted in an environmentally acceptable and safe manner, consistent with the environmental legislation and the good international industry practice REPUBLIC OF CYPRUS Energy Service – MCIT
  14. 14. Maritime Boundaries International Bilateral Agreements Arab Republic of Egypt Delimitation of the EEZ (2003) Framework Agreement concerning the development of cross-median line hydrocarbon resources (2006) Confidentiality Agreement (2006) Lebanon Delimitation of the EEZ (2007) Israel Delimitation of the EEZ (2010) REPUBLIC OF CYPRUS Energy Service – MCIT
  15. 15. 1st Licensing Round - Exploration Licence, Block 12 Oct. 2008: Exploration Licence and PSC with Noble Energy International Ltd Sept. 2009: 469 sq km 3D seismic survey (Prospect: Aphrodite) Jun. 2011: 4,000 km 2D seismic survey + Grav. & Mag. surveys Sept. 2011: First Exploratory Well Oct. 2011: First Renewal of the Exploration Licence – 25% Relinquishment REPUBLIC OF CYPRUS Energy Service – MCIT
  16. 16. Exploration Licence, Block 12 Natural Gas Discovery 28 Dec. 2011 7tcf gross mean estimated resources 310 feet net natural gas pay (Miocene sand intervals) 40 sq. miles field area 5,860m total depth 1,688m water depth REPUBLIC OF CYPRUS Energy Service – MCIT
  17. 17. Exploration Licence, Block 12 REPUBLIC OF CYPRUS Energy Service – MCIT
  18. 18. 2nd Licensing Round Available Blocks: 1-11 & 13 2nd Licensing Round: 11 Feb. – 11 May 2012 Number of Applicants: 15 Companies/Consortia Number of Applications Submitted: 33 Countries of Origin: United Kingdom, France, USA, Israel, Netherlands, South Korea, Russia, Malaysia, Italy, Australia, Norway, Canada, Indonesia, Cyprus Evaluation of the applications is carried out by a Committee The terms and conditions of the Contract shall be negotiated with the selected applicant The competent authority for the granting of licenses is the Council of Ministers REPUBLIC OF CYPRUS Energy Service – MCIT
  19. 19. Development in Block 12(Subject to Approval) REPUBLIC OF CYPRUS Energy Service – MCIT
  20. 20. Natural Gas Demand in Europe Natural Gas Demand in EU27 Share of Natural Gas in EU27 Primary Energy Consumption Natural Gas Production within EU declines The share of Natural Gas in EU’s primary energy consumption will remain high Additional Supplies need to be definedSource: Eurogas REPUBLIC OF CYPRUS Energy Service – MCIT
  21. 21. Natural Gas Supply in Europe - AlternativesSource: Enel REPUBLIC OF CYPRUS Energy Service – MCIT
  22. 22. Natural Gas Projects (Subject to Political Decisions) Domestic Market • Gas Supply via Pipeline EU and International Market • Liquefaction Plant • Gas export pipeline REPUBLIC OF CYPRUS Energy Service – MCIT
  23. 23. Liquefaction Plant – Commercial Perspectives(Subject to Political Decisions) Train 1 Train 2 Train 3 Year online 2018-2019 Future Far Future Capacity (mtpa) 5 5 5 Noble Energy Future Upstream Future Upstream Gas Suppliers 2nd Licensing Round Producers Producers (potential) Licensees LNG buyers Asia – 65% Asia – 60% Asia – 50% (contracted destination) Europe – 35% Europe – 40% Europe – 50% Independent LNG Plant Independent LNG Plant Independent LNG Plant Company A Company B Company C Operator (shareholders may be (shareholders may be (shareholders may be same as owners) same as owners) same as owners) Governed by a Joint Use and Operating Agreement Total Cost (USD) 10 billion 8 billion 6 billion Japan Crude Cocktail Japan Crude Cocktail Japan Crude Cocktail (JCC) (JCC) (JCC) Price Marker Fuel Oil Fuel Oil Fuel Oil Commercial Tolling Tolling Tolling Structure REPUBLIC OF CYPRUS Energy Service – MCIT
  24. 24. Gas Export Pipeline (Subject to Political Decisions) REPUBLIC OF CYPRUS Energy Service – MCIT
  25. 25. Integrated Gas Project in Cyprus – A Future PerceptionGas ExportPipeline Gas from other upstream fields REPUBLIC OF CYPRUS Energy Service – MCIT
  26. 26. Cyprus: Energy Perspective Potential offshore natural gas discoveries: Make Cyprus an exporter of natural gas Modernize Cyprus economy and enhance energy outlook Improve countrys trade balance and lessen carbon dioxide emissions Establish an industry related to natural gas technology Provide the revenues to invest in renewable energy sources & energy saving Create employment prospects Develop alliances increasing the national security The natural gas resources in the region could: Make a substantial contribution to Europe’s energy security through development of relevant infrastructures for gas export Radically contribute to the development of the region and to the increase of the geopolitical stability Turn the region into an area of sustainable and balanced economic development, enhance political stability and improve bilateral relationships by developing synergies REPUBLIC OF CYPRUS Energy Service – MCIT
  27. 27. Thank you for your attention!REPUBLIC OF CYPRUS Energy Service – MCIT