Greek Cyprus gas field smaller than initial estimate

NICOSIA - The Associated Press

Noble Energy company's offshore oil and gas rig is seen some 115 miles (185 kilometers) off Cyprus' south coast, in this Monday Nov. 21, 2011 file photo, provided by the Cyprus Press and Information office. AP photo / Cyprus Press and Information Office

Greek Cyprus said Oct. 3 its plan to turn itself into a regional energy hub remains on track, despite new findings showing that an offshore gas field is noticeably smaller than initially estimated.

The small Mediterranean island nation, which earlier this year became the fifth country that uses the euro to receive outside financial assistance, is aiming to build a multibillion euro facility by 2019-20 to liquefy excess gas supply for export to Europe and beyond.

The facility is a key plank of the government's plan to restore the country to financial health and the field, dubbed "Aphrodite" after the ancient Greek goddess of love who according to myth was born in Cyprus, will anchor that.

The country's energy minister, Yiorgos Lakkotrypis, said Aphrodite contains between 3.6 and 6 trillion cubic feet of natural gas. That's below a 2011 estimate that estimated the size of the field - being developed by U.S. firm Noble Energy Inc. and its Israeli partners Delek and Avner - at 5 to 8 trillion cubic feet. The field lies around 150 kilometers off the island's southern coast.

Lakkotrypis said the prospects of additional gas finds inside Cypriot waters remained good, but a second appraisal well will be needed at Aphrodite for more exact estimates that may delay the facility's construction.

"The quantities are there. The main challenge is timing," Lakkotrypis told a news conference.
 Charles Ellinas, the executive president of Greek Cyprus National Hydrocarbons Co., told The Associated Press that a second appraisal well could delay the start of construction of the gas facility by possibly a year.

Speed is essential for cash-strapped Greek Cyprus, which saw its banking sector crushed under a financial rescue that it agreed in March with its euro area partners and the International Monetary Fund. In exchange for a 10 billion euros loan, uninsured depositors in the country's two largest banks were forced to take huge losses on their savings. The money was used to prop up largest lender Bank of Cyprus, while the smaller Laiki was wound down.

More than 10 billion euros of profit 

Greek Cypriot officials have said that gas revenues remain a long way off and that the potential for future mineral wealth is no excuse for not following through with the economic reforms the country has to implement in exchange for its bailout loans.

But the authorities are hoping that the allure of a gas bonanza can help restore confidence in a shaky economy and attract investment. The country is grappling with a 17 percent jobless rate and will see its economy shrink by a cumulative 13 percent this year and next.

Lakkotrypis said preliminary estimates show that Cyprus stands to gain a net profit of 12-18 billion euros over a period of 14 years just from the Aphrodite field.

Cyprus has also licensed France's Total and a consortium made up of Italy's ENI and South Korea's Kogas to search for offshore hydrocarbons in other 'blocks' or areas.

John Tomich, the head of Noble's Cyprus' operations, said seismic tests have yielded at least "half a dozen promising features" that may contain gas. Tomich said Noble is "very encouraged by the exploration potential" of the area for which it holds a gas exploration license.