Total secured two blocks in the Cyprus Exclusive Economic Zone earning a license fee of about 100 mln euros to the cash-strapped government that is facing a runaway public sector debt of about 17 bln euros and has sought a bailout from international lenders.

Pierre Olinger, the company’s vice president for the Middle East, signed two production sharing agreements with the Cyprus Trade Minister Neoclis Sylikiotis on Wednesday, saying that Total will pay 24 mln euros for the signing rights and present its initial plans on how it will proceed with seismic research and later on with drilling in Blocks 10 and 11. Total said it may also explore for crude oil.

The two gasfields are adjacent to U.S. Noble Energy’s initial find of about 7 trln cubic feet in potential reserves in the Aphrodite gasfield, where a second exploration drill is expected over the next two months in cooperation with Israeli partners Delek and Avner.

Sylikiotis said that Noble has been granted permission to present the data which it has gathered from the Cyprus plot to other companies, such as Total, Italy’s ENI and Australian Woodside that has bought 30% of the rights of the Israeli Leviathan field, which borders the Cyprus EEZ. ENI partnered with Korea’s Kogas to explore for hydrocarbons in blocks 2, 3 and 9.

Sylikiotis also said that the Cyprus state-owned oil and gas company, KRETYK, is going ahead with the proposals of interest for an international economic advisor that will set up an investment plan and start negotiations with the companies that hold exploration licenses, with buyers and for presale contacts. Construction of a gas terminal should begin in early 2015.

“These are expected to proceed during the next two years so that we will be able at the beginning of 2015 to say that the construction of the terminal is getting underway,” he noted.

Sylikiotis said earlier this month that over the next three years, up to ten exploratory drillings will take place, and that in the meantime the infrastructure must be prepared for the commercial exploitation of the hydrocarbons, which translates into thousands of jobs in the energy and other sectors.

He also referred to the financial and political benefits from the exploitation of hydrocarbons and cooperation with countries such as the US, France, Italy, Israel and South Korea, and the prospect of becoming a regional energy hub.

Total’s Middle East President for oil exploration and production Arnaud Breuillac said on February 7 that the Total group has the relevant expertise in terms of deep-water exploration and the development of large off-shore projects to fully explore and develop the potential oil and gas reserves, noting that the two blocks actually fit in very well with the new exploration strategy of Total, which is aiming at going for new places in uncharted territories. He had said that Total would be doing seismic work on the two blocks, specifically 2-D seismic on block 10 and 3-D seismic on block 11.

Asked if Total would be drilling for oil first, Breuillac said "we are actually not sure at this point in time for exactly what we are going to be drilling but, we are going for two different plans on the two blocks and so we actually might be drilling for oil or for gas," adding that it was "a bit too early to say but the possibility of oil is considered."

Source: Financial Mirror