Noble’s Greek Cyprus gas drill at lower end of estimates

NICOSIA - Reuters

Noble Energy’s offshore oil and gas rig is seen off Cyprus’ south coast. AP photo

A landmark natural gas well off Greek Cyprus has produced less than anticipated, potentially delaying investment in a liquefied natural gas plant and plans for export by 2020.

Greek Cyprus and its exploration partners, Texas-based Noble Energy, on Oct. 3 announced an around 5 trillion cubic feet (tcf) natural gas find, lowering the initial estimate of 7 tcf made in late 2011.

One gas official said lower estimates could briefly delay plans to start work on a $6.0 billion liquefied natural gas terminal in 2016 until more wells off Greek Cyprus are discovered, but that could be avoided with further appraisals of the prospect.

Energy Minister Yiorgos Lakkotrypis said the island was committed to seeing the LNG project through. Even though lower than expected, the discovery was a rare glimmer of good news for Greek Cyprus. It teetered on the brink of financial collapse in March with its one million inhabitants bracing themselves for at least two years of deep recession from an EU/IMF imposed austerity program. “Despite the lower quantities we announce today compared to those of 2011, the confirmed reserves affirm a particularly important reserve of natural gas,” Lakkotrypis told reporters.

He said a “very preliminary” estimate, based on reserves of 4.5 tcf in Noble’s prospect, placed its gross value at $50 billion. “We would be looking at a net profit for the Republic of between $12 and $18 billion over a 14 year period,” Lakkotrypis said.

LNG plan still on table

Greek Cyprus says there is much more gas waiting to be discovered. France’s Total, Italy’s ENI, and South Korea’s KoGas planning exploratory drillings in other offshore areas starting next year.

Noble is a leading partner in wells off neighboring Israel, where there have been massive discoveries in recent years, attracting the attention of the EU, which wants to wean itself off over-reliance on Russian gas.

Greek Cyprus is also in talks with Israel on its neighbor using the Greek Cypriot LNG terminal to export Israeli gas.

“The LNG project we are working on with the government remains our strategic priority in terms of commercializing the gas,” Noble country manager John Tomich said.