Cyprus energy and trade minister Giorgos Lakkotrypis was commenting on an announcement posted on Sunday by Delek Drilling and Avner - subsidiaries of Israel’s Delek Group - saying the companies had approved a decision to drill at the Aphrodite 2 well in the Block 12 prospect.

The announcement said Noble Energy, the prospect’s operator, had recommended to its Aphrodite partners to green-light the appraisal well at Aphrodite 2 as part of the work plan approved by the Cyprus government under the production-sharing contract. A budget of €US117m (€90m) has been approved for the drilling operations.

“This drilling may be used as a production well in the future,” the announcement said, adding that drilling was expected to start “in the coming two weeks and last for approximately four months.” Confirming the news, the energy minister said the drilling is expected to be wrapped up by October. Appraisal, or follow-up, drilling is done to confirm estimated reserves and determine the quality of hydrocarbons within a prospect.

In late 2011, following exploratory drilling at Aphrodite 1, Noble announced the discovery of a gross mean of 7 trillion cubic feet of natural gas. Should the estimates be borne out, the energy minister said, that would allow authorities to proceed with more detailed planning on monetising the gas. The government plans to build a liquefied natural gas (LNG) plant at Vassilikos, Limassol, for the processing, domestic distribution and export of offshore natural gas. Confirmation of the gas estimates at Aphrodite would allow Cyprus to start sounding out long-term buyers for the gas, also paving the way to seeking financing for the LNG terminal.

The government wants to sign a memorandum of understanding with Noble for developing the LNG facility. The deal’s purpose is to set up a joint venture between the Cyprus National Hydrocarbons Company and Noble, a special purpose vehicle to seek out investors for the plant. The intended deal relates to the construction of a single train at Vassilikos. More trains could subsequently be added to the facility in the event of further gas discoveries in Cypriot waters.

The drilling at the Aphrodite well will be carried out by the ENSCO 5006 semi-submersible platform, currently on lease by Noble. The rig is being moved to Cypriot waters after prospecting in Israel’s Karish prospect. Meanwhile preparatory work is underway at the shore base operated by EDT Offshore, an oil and gas services company. The base, located at the port of Limassol, will provide support to Noble, including a fully operational mud-plant for drill stem testing. EDT also operates a heliport providing support to drilling platforms.

Cyprus, heavily reliant on expensive heavy fuel oil for its energy needs, is meantime exploring the possibility of importing natural gas on an interim basis to power its electric plants. The Natural Gas Public Company (DEFA) is currently in the stage of evaluating three proposals. DEFA would be opening the bidders’ financial tenders later this week or early next week, according to the energy minister. Officials have stressed they are not bound to conclude a deal if the cost of electricity production from natural gas is not substantially lower than current costs using heavy fuel oil.

Source: Cyprus Mail