Total pullout

Despite threats that investing in Greek Cypriot oil and gas plans might result in Turkey blacklisting it in Turkish tenders, French oil giant Total bid and won tenders to explore for gas in blocs 10 and 11 of the Economic Exclusive Zone of Cyprus, disputed by Turkish Cypriots and Turkey. Now, stating that its surveys have failed to identify geological structures with positive prospects of oil or gas, Total has decided to not go ahead with drilling, scheduled in the first half of 2015. Instead of making 250 to 300-million euros of further investment to drill blocs 10 and 11, the company, examining the prospects, decided the chances of profitable outcome were so poor that it opted to cut its losses and pull out of Cyprus, even though it paid around 48 million euros to the Greek Cypriot government for rights to the two blocs and spent over 25 million euros so far for guarantees, insurance and operational costs.

After the Italian-Korean consortium ENI-KOGAS declared in December 2014 that drilling in the Onasagoras plot in bloc 9 had produced no positive results, Total’s pullout was particularly important.

Furthermore, the ENI-KOGAS consortium is presently drilling in another plot in the same bloc 9 amid rampant speculation in southern Cyprus that if the results are disappointing again it might follow suit and also suspend its Cyprus operations.

Naturally, failing to find hydrocarbon resources at every try is considered by experts as the nature of oil and gas drilling, a factor that makes drilling hydrocarbons rather costly. Vast amounts are often spent with no uncertainty that a viable bed or economically feasible resource could be found. With costly drilling operations, companies, for sure, should not be expected to continue drilling indefinitely. Yet, this is the nature of that industry.

Indeed, while Greek Cypriots express their shock nowadays with Total’s decision to pull out of Cyprus, the news ought to come to them as no surprise because it was in the Greek Cypriot media over the past many months that the French oil giant was informing the Nicos Anastasiades administration that it was not inclined to keep on drilling indefinitely and the government was in pains to convince Total to stay.

Despite the initial euphoria that hydrocarbon finds off Cyprus might be a catalyst and facilitate progress toward a resolution to the almost 60-year-old Cyprus problem sufficient gas could be found so far and the Cyprus talks process was seriously affected by gas explorations. Was it not unsuccessful ENI-KOGAS drillings that forced Turkish Cypriots to ask Turkey to dispatch the Barbaros seismologic ship somewhere close to bloc 9 to demonstrate their “equal share” in Cyprus off-shore resources? Was it not because of the related NAVTEX issued and the seismological works carried out by Barbaros off Cyprus that Anastasiades decided to call it off and withdrew from the talks with his Turkish Cypriot counterpart Dr. Derviş Eroğlu?

The end result? Prospects for a quick resumption of talks remain slim, but hopes of hydrocarbons transfusing the island from rags to riches appear faltering en masse as well. In the absence of sufficient gas and Israel aligning with Egypt, Greek Cypriot hopes of converting the island into a “gas hub for Europe” through its utopian LNG plants or even loonier trans-Mediterranean gas pipeline, all drained. Except the Aphrodite field – where gas found so far is said to not be economically feasible for any use other than pumping it to Turkey or Europe via Turkey – so far nowhere off Cyprus hydrocarbons were able to be found in substantial quantities to feed Greek Cypriots’ wild dreams.

The hydrocarbon card was used wrongly by Greek Cypriots right from the beginning. Despite the earlier verbal moratorium agreement between the two sides to keep this chapter closed until a deal was reached in the Cyprus issue, and even the fascist Tassos Papadopoulos, did not open this Pandora’s box, it was the socialist Demetris Christofias who, in the wake of a major blast at a military camp and the economy’s nosedive, hoped to win prestige and votes by fooling Greeks with stories of rich gas.

Those stories did not help Christofias and he successfully earned the title of worst Greek Cypriot leader. Anastasiades preferred to walk in Christofias’ shoes rather than trying to match the “pro-settlement leader” role some loonies believed he would play. Alas, it was proven that like all his predecessors, Anastasiades aimed at only preserving the status quo, unwilling to move an inch as he considered a settlement as compromising territory, sovereignty and governance to Turkish Cypriots.
The propaganda machine, though there was no gas to sell, was busy over the many years to herald accords of gas sales to Egypt, Jordan, Europe, huge gas deals with Israelis… It is all a “total” fiasco now…

As the conservative and pro-government Cyprus Mail wrote in its rather critical lead editorial last week “A country with the aspirations of becoming a regional energy center cannot have a big oil company closing its operations without even conducting exploratory drilling.”