Following the recent news that ExxonMobil Corp has discovered a significant gas field offshore Cyprus via the Glaucus-1 exploration well, Daniel Rogers, Upstream Oil & Gas Analyst at GlobalData, a leading data and analytics company, offers his insight on the potential of the discovery and the remaining challenges in the Cypriot upstream sector:
“Glaucus marks an impressive run of success in the Cyprus Exclusive Economic Zone (EEZ) with up to approximately 22 trillion cubic feet (tcf) of natural gas in-place, discovered from just four fields. Whilst neighbouring Egypt has a well-established gas sector, and Israel is progressing nicely, gas in Cyprus still remains stranded, left in the wake of neighbouring countries that have pushed forward with their investments. Eastern Mediterranean gas production is already set to grow from approximately 7 billion cubic feet per day (bcfd) in 2018 to over 10 bcfd by 2020, driven by Egypt and Israel.
“Since Noble Energy, Inc.’s Aphrodite gas discovery in 2011 that has remained stranded due to the partners being unable to reach a final investment decision, significant volumes have been discovered, which could prompt the government to rethink its terms or help incentivise the progression of a hub development. Currently Cyprus does not use gas for its domestic consumption and has no existing export infrastructure. A new pipeline or greenfield Liquefied Natural Gas (LNG) facility are the only current possibilities available, both of which require significant capital.
“With partner Qatar Petroleum, there is no shortage of gas development and LNG expertise present. Unfortunately, with a severe lack of infrastructure in the region, the partners require collaboration with neighbouring companies and/or countries to come up with viable development solutions. Delays are inevitable and alignment will prove challenging; nonetheless, the additional volumes can’t hurt the prospects of an Eastern Mediterranean pipeline currently being considered by Cyprus, Greece, Italy and Israel.
“The transport of gas via a newly constructed pipeline to Egyptian LNG facilities, which have export capacity of 13 million tons per annum, is being considered for Aphrodite. This would be a beneficial short term solution but would leave Cyprus dependant on Egyptian infrastructure and vulnerable in times of political tensions.”