Wednesday, 8 May 2013

Cyprus presses Israel on energy collaboration

Cyprus’ president Nikos Anastasiades has been in Israel these last few days heading a delegation discussing closer commercial and political ties between Nicosia and Tel Aviv. Up until a few years ago, relations between Cyprus and Israel were poor, stemming from Israel’s perceived closeness to Turkey, which has been occupying 37 percent of Cypriot territory since it invaded the island in 1974. However, deteriorating relations between Turkey and Israel and massive hydrocarbon finds in the adjoining Israeli and Cypriot Exclusive Economic Zones have boosted ties between Cyprus and Israel, and although we remain cautious because the USA is acting determinedly to repair fences between Israel and Turkey and little of substance (certainly nothing irreversible) has so far materialised as a result of the improved Nicosia-Tel Aviv ties, it is obvious that Nicosia is investing a great deal of effort and hope in trying to win over the Israelis, as the article below from today’s Jerusalem Post makes clear.

Also worth pointing out is that Cyprus now seems to have decided that it will go ahead with an LNG plant to process and export its hydrocarbon resources. This nips in the bud ideas coming from certain quarters that envisage Cyprus (and Israel) building a pipeline to Turkey to traffic its hydrocarbons; a move that would have drawn Turkey into the Eastern Mediterranean gas game and provided an incentive, the thinking went, for Turkey to promote the reunification of Cyprus. However, for Cypriots, becoming Turkey’s economic satellite and trusting their natural resources to Turkey and becoming reliant on Turkish good-will would have been the height of stupidity and, fortunately, the LNG option is now being pursued determinedly.


‘Israel, Cyprus cooperation could impact gas market’
Only by combining their forces will Israel and Cyprus be able to make a significant dent in the global natural gas economy, the Cypriot energy minister stressed on Tuesday.

“We feel that through a close collaboration with Israel we will be able to be a major player in the world energy market, something that for each country individually might be too hard to achieve,” said Energy, Commerce, Industry and Tourism Minister Yiorgos Lakkotrypis.

Lakkotrypis was addressing a group of Israeli and Cypriot business leaders and government officials at a seminar entitled “Cyprus: An International and Professional Center,” held in Tel Aviv on Tuesday afternoon and hosted by the Cyprus Chamber of Commerce and Industry, the Cyprus Energy, Commerce, Industry and Tourism Ministry, in association with the Federation of Israeli Chambers of Commerce.

While the participants from approximately 100 Israeli companies and 30 Cypriot firms ranged in fields “from milk to gas,” the focus of leaders from both countries remained largely on the Mediterranean natural resource that each of the nations has come to enjoy.

The amounts of gas discovered in each country respectively might be considered small individually, but, by working together, Israel and Cyprus have the capability to “create the third pillar of energy routes” in the world, according to Lakkotrypis.

“What an unbelievable opportunity we have as two countries to play a role in the energy market that is shaping as we speak, worldwide,” he said.

Lakkotrypis and the Cypriot businessmen and women had arrived in Israel as part of a larger delegation that includes Cypriot President Nicos Anastasiades and officials from the country’s Foreign Affairs Ministry.

Echoing Lakkotrypis’s comments, Anastasiades likewise stressed during the seminar that natural gas “can become the driving force” for partnership between Israel and Cyprus.

Natural gas finds from the Tamar reservoir’s 250 billion cubic-meters are already flowing into Israel, to be used for domestic purposes only. The neighboring, more than double-sized Leviathan reservoir should be providing gas within the next few years, and will likely be doing so in both an export and domestic capacity – pending government approval of an export policy.

Cyprus’s first explored basin, the Aphrodite reservoir in Block 12 adjacent to Leviathan, is estimated to contain about 198 billion cu. m. of gas and is being drilled by some of the same partners working on the Israeli reservoirs – Houston-based Noble Energy and Israel-based Delek Drilling and Avner Oil Exploration.

There are two other clumps also slated for exploration in the Cypriot zone, under a combination of Italian, Korean and French firms.

Israel and Cyprus signed a delimitation agreement on their Exclusive Economic Zones in 2010, and a framework agreement is now underway concerning the development of cross-border hydrocarbon management, Lakkotrypis explained.

Anastasiades likewise confirmed that his administration would “remain dedicated to proceeding expeditiously with the conclusion of a framework agreement.”

At Aphrodite, the American and Israeli cohort should conclude drilling an appraisal well by October 2013, after which the team can determine for sure that its contents are proven reserves with commercial capacity, the minister said.

Gas flow from Aphrodite should start between 2020 and 2021, Lakkotrypis added.

Simultaneous to the exploration of Cypriot reservoirs, plans are unfolding to construct an onshore liquefied natural gas (LNG) generation plant, in order to facilitate the export of the country’s gas.

While “the decision to go for an LNG terminal was not taken lightly” and is considered very expensive, the plant will allow for the most flexibility in Cyprus’s export options, Lakkotrypis explained.

Unlike Israel, Cyprus is not facing much resistance among its citizens toward the idea of exporting gas, as the quantities likely found in the reservoirs are “very small compared to the needs of the country,” Lakkotrypis explained.

The Cypriot government is therefore working with Noble Energy on developing its future LNG plant, which will likely be completed by 2019 or 2020. As competition around the world for natural gas surges – particularly due to the United States’ massive shale gas discoveries – moving quickly with the plant’s construction “is super critical,” Lakkotrypis said.

Uriel Lynn, president of the Federation of Israeli Chambers of Commerce, emphasized that cooperation on natural gas and on other business ventures between the two countries would be beneficial “for our region as a whole.”

To further this growing partnership, an Israeli business delegation would be officially visiting Cyprus in June, Lynn said.

Christakis Papavasilious, president of the Israel-Cyprus Business Association, emphasized “the new historic era” that Cyprus and Israel are entering together, and that the two countries should rely on each other in order to push forward.

“The discovery of energy resources in our region has created a very strong impetus in our relations,” Papavasilious said. “There is no turning back.”

Gad Yardeni, president of the Israel- Cyprus Chamber of Commerce, called the gas discoveries a “gift from mother nature” and stressed the need for middlesized energy firms in both countries to pursue connections with one and other.

At a luncheon that the Cypriot president attended earlier that day in Jerusalem with President Shimon Peres, Anastasiades spoke of “inaugurating a new era” for the two countries due to the natural gas discoveries.

“We are both committed to working together and we have a common blessing in our seas,” he said. “God has blessed us with energy and it is our duty to see how we can secure each other.”

Anastasiades expressed his feeling that Cyprus truly “needs” Israel and that he did not expect Israel to need Cyprus to the same extent in return. That being said, he declared his country to be a “reliable and credible friend and brother,” and voiced the hope that both countries should enjoy stability, peace and prosperity.

Describing both countries as islands – Cyprus in the geographic sense and Israel in the political sense – Peres noted that the two nations share many similarities and reciprocal benefits.

“Without Cyprus, we would be far from Europe,” Peres said. “We see in Cyprus a friend – politically and geographically.”

In order to secure that European mainland connection, the two countries will need to work together by combining their resources to achieve a new route of energy, Lakkotrypis stressed back at the business seminar.

“None of our two countries individually can make a big difference,” Lakkotrypis said. “The quantities that we have are negligible compared to the total needs that Europe has and will have.”

“We are living in very important times, very exciting times for both countries,” he continued. “We have our fair share of challenges, but the prospects do remain excellent.”

2 comments:

Anonymous said...

I do not believe the bilateral relations with the Israelis bodes well for the Cyprus. Cyprus will simply develop another link of " dependency" . The dilema Cypriots face is similar to that of Greece. Both have been split apart and both have become wholly dependent on third parties.

John Akritas said...

I don't believe there is a single country in the world, not even extremely powerful ones, which is not, to a greater or lesser extent, dependent on others to achieve its goals. In Cyprus' case, the advantages of inducing Israel into some sort of energy alliance are obvious, and could potentially enhance Cyprus' independence, sovereignty and security.