Monday 25 March 2013

Reuters analysis of Cyprus oil and gas development



Reuters published an analysis of Cypriot oil and gas development potential on March 22nd:

So far, an estimated 200 billion cubic metres (bcm) of natural gas worth $80 billion at current prices have been discovered in the Aphrodite gas field in Cypriot waters.

The Cypriot government says that it hopes to begin exports of liquefied natural gas (LNG) from 2018, although most analysts say production is unlikely to begin before 2020 and some doubt whether the fields will be developed at all.

"If Cyprus has found only 7 trillion cubic feet (200 bcm) right now, that's not yet enough to think about doing LNG given the number of projects ahead in the queue, such as the over 100 tcf of gas already found in East Africa," said Kim Fustier, oil and gas analyst at Credit Suisse.

Although I agree that the Cypriot fields will be difficult to develop and export, it is important to note that the initial finding of 7 trillion cubic feet concerns only block 12, which has been explored by Noble. There are an additional 12 fields under exploration, so the potential for further finds is high.

Navigator Consulting Group implemented a more detailed review on Cypriot oil and gas on May 11th, 2012: we’ve recently published this on our website: CyprusOil and Gas: Strategic Development Options.

Nevertheless, a direct result of the financial crisis in Cyprus means less bargaining power over multinational producers. And the result of US shale gas finds as well as additional fields coming online probably means lower prices in the future.

Given this uncertainty, I can understand why the Troika is not accepting a securitisation of future oil and gas revenues.


© Philip Ammerman, 2013


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