ECONOMY

Cyprus to grant new gas drilling license

Cyprus will give France’s Total SA a license to drill for offshore oil and gas deposits, a move the cash-strapped country hopes will yield much-needed revenue.

Government spokesman Stefanos Stefanou said on Tuesday the licensing deal, which will be signed today, covers drilling in two of 13 blocks on the southern coast that make up the country’s 51,000 square-kilometer exclusive economic zone.

The two blocks lie west of a gas field – now being developed by US firm Noble Energy and its Israeli partner Delek – that holds an estimated 5-8 trillion cubic feet.

The deal comes two weeks after Cyprus licensed a consortium made up of Italy’s ENI SpA and South Korea’s Kogas to drill in three other blocks.

New revenue from gas production would be good news for cash-strapped Cyprus, which is trying to finalize an international rescue loan of as much as 17 billion euros – roughly equivalent to the country’s entire economic output – for its ailing banks and economy.

Charles Ellinas, who heads the newly established Cyprus National Hydrocarbons Company, said Total is looking to drill for oil which is easier to extract and deliver to markets.

Cypriot waters are estimated to hold at least 60 trillion cubic feet of gas, according to Ellinas.

That would be plenty to cover domestic needs for decades and supply Europe’s growing demand for the fossil fuel.

Ellinas said that at the going price of 7.4 billion euros for 1 trillion cubic feet of gas, Cyprus stands to earn big profits once a planned onshore processing facility is built to produce liquefied natural gas, which can then be exported.

He said the start of gas exports has been set for 2019.

Cypriot Commerce Minister Neoklis Sylikiotis said the aim is for Cyprus to become a regional energy hub.

The country is now in talks with Israel, which has discovered substantial offshore gas fields of its own, on ways to jointly process their reserves at the planned Cypriot facility for export.

[AP]