I’ve written a lot over the last few months about a tiny island emerging as one of the world’s best spots for natural gas production.
The eastern Mediterranean nation of Cyprus.
And a new export deal this week is sealing the deal when it comes to creating a big market for big discoveries here.
That’s coming from Cyprus’ neighbour across the water, Egypt. Where local press reported Wednesday the government has signed an agreement to import much of the natgas that Cyprus might produce over the coming decades.
The deal was signed in Cyprus between Egyptian Petroleum Minister Tarek El-Molla and Cypriot minister of commerce, industry, and tourism Yiorgos Lakkotrypis. Stating that Egypt will take natgas from Cyprus’ fields via a marine pipeline — which will now presumably be planned and moved toward construction.
The move comes at a critical time for the development of Cyprus’ petroleum resources. With a number of major discoveries having been made in the offshore here the last few years — including the 4.5 trillion cubic feet Aphrodite field found by Noble Energy in 2011.
None of these are yet producing. Largely owing to the challenges in marketing the gas from an island in the middle of the sea.
But this week’s deal looks like it will change that. Giving Cyprus natgas producers a preferred export route into a market that’s desperately searching for more supply (which should ensure decent pricing for exports).
The export deal is especially important in light of ongoing exploration across the Cyprus offshore. With the country right in the middle of a license round that will include the award of key acreage adjacent to the Zohr natgas mega-discovery made by Eni in Egyptian waters.
If an export route to Egypt does indeed emerge, it will make the exploration race for big discoveries in Cyprus all the much hotter. Watch for more announcements on the planned export pipeline — and for any associated pickup in exploration activity in the eastern Mediterranean.
Here’s to a way out,