Production Sharing contract signed for Cyprus block 10

The contract for the exploration and production-sharing of block 10 in Cyprus’ exclusive economic zone (EEZ) was signed on Wednesday, in the presence of ministers of energy, foreign affairs, finance, and labour and delegations from ExxonMobil and Qatar Petroleum.

In a short speech after the signing, energy minister Yiorgos Lakkotrypis welcomed the commitment of the companies picked to develop block 10.

The government had decided to launch a third licensing round in February 2016, and managed to complete it within a year.

“By exercising our sovereign rights, we feel we have clearly achieved the target set by the government to attract oil and gas companies with extensive experience to operate in our EEZ,” Lakkotrypis said.

“The strategic significance of ExxonMobil’s and Qatar Petroleum’s presence in the EEZ of Cyprus and, for the first time, in the Eastern Mediterranean region, is immense, especially when considering their financial depth and calibre of expertise in the field of hydrocarbons and LNG.”

A consortium between ENI and Total won block 6, ENI alone was awarded block 8, while the ExxonMobil-Qatar Petroleum consortium was awarded block 10.

Overall, Cyprus will receive a total €103.5 million in signature bonuses from the three contracts.

 “Our sincere hope, therefore, at the start of our newly established cooperation, is that it leads to the fulfilment of our common goals and expectations, for the optimal exploitation of the underwater wealth in Cyprus’ EEZ.”

In a statement, the consortium said the two companies have a “successful history of developing gas resources”.

“We appreciate our strong working relationship with the ministry of energy, and look forward to working with the government of Cyprus to evaluate and realise the country’s hydrocarbon potential,” said Andrew Swiger, senior vice president of ExxonMobil Corporation.

Saad Sherida Al-Kaabi, president and CEO of Qatar Petroleum, said the agreement “expands our international upstream footprint into the Eastern Mediterranean for what we hope is one of the most promising opportunities in the area”.

“We look forward to working with the government of Cyprus along with our partner ExxonMobil in an effort to bring greater benefit to the country,” he said.

The contract includes a commitment from the ExxonMobil-Qatar Petroleum consortium to acquire 3-D seismic data, drill two exploration wells in the first licence period and work with the government to build skills and strengthen understanding of the petroleum business through focused training programs, the consortium said.

The companies have begun planning for drilling operations and intend to drill a first exploration well in 2018.

Prior to the signing ceremony, the two companies’ delegations met with President Nicos Anastasiades.

Last month, the cabinet approved contracts with France’s Total, Italy’s Eni, Exxon Mobil and Qatar Petroleum to explore for oil and gas in offshore areas south of the island. The consortium will officially sign the contracts with the Cypriot government for exploration rights for three offshore blocks off the south and south-western coast.

Exploring the Mediterranean’s Levant Basin has become more attractive since Eni discovered Egypt’s offshore Zohr field in 2015, the biggest gas field in the Mediterranean and estimated to contain 850 billion cubic metres of gas.

Eni and Total are in a consortium for one of the blocks and ExxonMobil and Qatar have joined up for another. Eni will be on its own in a third block. The blocks were offered in the third licensing round held by Cyprus.

Total, which won rights for another block in a previous licensing round, planned to conduct drilling this year in Block 11, which borders the Zohr discovery. Total relinquished Block 10 one year ago as it did not find any prospect where it can drill an exploratory well.

Eni said last month that it had finalized a deal with Total to buy a 50 percent interest in Block 11, with Total remaining the operator.