Cyprus Launches 2nd Licensing Round

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Cyprus Launches 2nd Licensing Round
Energy Brief
18th February 2012

The Republic of Cyprus has launched its second licensing round, making 12 blocks within its offshore exclusive economic zone (EEZ) available for bidding to international oil companies. The announcement first appeared in the Official Journal of the European Union on February and was placed on the website of the Ministry of Commerce, Industry and Tourism (www.mcit.gov.cy) on February 13. Companies have 90 days to submit their bids. Evaluation of the applications is expected to take place over a six month period, and blocks could be awarded before the end of the year.

Following the discovery in December by Noble Energy of around 7 trillion cubic feet of natural gas inBlock 12, as well as the numerous and sizeable discoveries made by Houston-based Noble in the Israeli offshore, the Cyprus bidding round is expected to attract considerably more attention than the first round in 2007. While Cyprus made 11 blocks open for bidding then, few bids were placed and only Block 12 was awarded.

Noble Energy holds a 70% working interest in Block 12 after a farm-in by two subsidiaries of Israel’s Delek Group, Noble’s main partner in the Israeli offshore. Noble is assessing the results of the Cyprus A-1 well, the first offshore well ever drilled in Cyprus, and is looking to carry out appraisal drilling during the latter half of 2012.

As expected, Turkey voiced its objection to the launch of the licensing round through a statement from its foreign ministry. Ankara holds that the government of Cyprus does not have the right to explore or exploit hydrocarbons in Cypriot waters because the Greek-Cypriot republic does not represent Turkish-Cypriots, who reside in the northern side of the island, which has been under Turkish military occupation since 1974.

In the statement, Ankara said: “We protest this unilateral step, which is both irresponsible and provocative, taken by the Greek-Cypriots despite all warning.” The statement said that the Cyprus EEZ overlaps areas claimed by Turkey as part of its continental shelf and that it also violates an agreement that the Turkish-Cypriot administration signed with the Turkish Petroleum Company (TPAO) giving TPAO the right to explore in Cypriot waters that are part of the EEZ.

Turkey “will give every support to the [Turkish-Cypriot administration] to prevent possible violations of Turkish-Cypriot concession blocks and thus to protect their rights and interests in maritime areas, the Turkish Foreign Ministry statement said. It also warned foreign oil companies to avoid exploration in the areas that Turkey claims as its own in the Mediterranean.

The Republic of Cyprus is a member of the European Union and is a signatory of the UN Convention on the Law of the Sea (UNCLOS). The EU, UN, US, Russia and others have expressed their support for Cyprus’s right to explore for hydrocarbons in its EEZ.

The Cyprus Foreign Minister on February 17 replied to Ankara’s statements saying that Cyprus would proceed with the exploitation of its natural wealth, the Cyprus Mail reported. “The Republic of Cyprus is determined to proceed in exploiting its natural wealth, especially in relations with hydrocarbons, for the economic development and prosperity of its people, without discrimination.” It added: “Turkey once more proves that its aim is not the protection of the rights of Turkish-Cypriots, as it professes, since it is claiming for itself a significant part of Cyprus’ western, southern and northern EEZ.”



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