Cyprus opens area for oil, gas exploration

AP News
Posted: Feb 13, 2012 10:57 AM
Cyprus opens area for oil, gas exploration

Cyprus has launched a second licensing round for offshore exploratory drilling as hopes grow that potential fossil fuel deposit discoveries will buoy the eurozone country's sagging economy, even though the efforts are raising tensions with Turkey.

An announcement on the Cypriot Commerce Ministry's website Monday invites license applications in the next 90 days to search for mineral deposits inside 12 of 13 sections that together make up the island's 19,700 square mile (51,000 square kilometer) exclusive economic zone off its southern coast.

The announcement was first published Feb. 11 in the European Union's official journal.

An initial licensing round in 2007 generated interest only from U.S. company Noble Energy, which last year began exploratory drilling in Block 12, the southeastern-most section of the Cypriot economic zone that sits close to a huge Israeli gas field.

Cypriot officials are predicting more interest in the second round following Noble's discovery of an estimated 5-8 trillion cubic feet (140-230 billion cubic meters) of natural gas in Block 12, the section not up for licensing in this second round.

That quantity of gas could make the small, crude oil-dependent island energy self-sufficient for two centuries, officials said.

The Cyprus government is currently mulling ways of exploiting the gas bonanza. Among the options being considered is piping the gas to the island to meet domestic energy needs while processing excess supply for possible export to European markets and beyond.

Israeli energy company Delek has proposed a partnership with Cyprus to build a facility on the island to process and export gas discovered in Cypriot and Israeli waters.

Israeli Prime Minister Benjamin Netanyahu will pay a one-day visit to the island this week _ the first ever by an Israeli prime minister _ to discuss expanding energy cooperation.

The gas discovery bodes well for Cyprus, which is struggling with record unemployment and a near-junk status credit rating due to its banks' high exposure to Greek debt.

But it has stoked tensions with neighboring Turkey, which doesn't recognize the island as a sovereign state.

Cyprus was split into an internationally recognized Greek speaking south and a breakaway Turkish speaking north in 1974 when Turkey invaded after an short-lived coup by supporters of a union with Greece.

Ankara strongly opposes a Greek Cypriot mineral deposit search on grounds that it disregards Turkish Cypriot rights to oil and gas wealth.