The media has learned that the two multinational corporations will sign the relevant agreements with the government this month, May 2014.

The Halliburton agreement will likely be concluded the weekend after the next (May 10 or 11), with Schlumberger putting ink on paper one or two weeks later.

Gas expert Charles Ellinas, former executive chairman of the Cyprus National Hydrocarbons Company, named the two companies when asked by the Cyprus Mail about local press reports suggesting two multinationals were about to set up shop here.

He said Halliburton in particular have been looking to rent land for their base of operations in the Aradippou/Larnaca area, close to the Larnaca harbour and the airport. Halliburton provides drilling services and gear for companies prospecting for hydrocarbons. Their base in Cyprus will cover the entire East Mediterranean, which is expected to become a hotbed of exploration activity in the years to come.

“Halliburton estimates that over the next few years around 50 to 60 new wells are going to be drilled in the East Med. We’re talking about Israel, Cyprus, and Lebanon. Supposing that drilling costs are anywhere from $5bn to $7bn, should Halliburton get half those contracts, it’s well worth it for them,” Ellinas said.

The island’s political stability is the chief reason why Schlumberger and Halliburton have picked Cyprus as the location for their regional base of operations. “It makes more sense to set up shop here rather than, say, Lebanon or Egypt,” said Ellinas. “This is a big deal for us.” Halliburton’s activities here would consist of storing their drilling gear and opening up offices.

“Once they’re up and running, they’d start bringing in their equipment. In addition to storage space, the gear would have to be serviced; the company would need supplies etc. This is where local companies come in, providing support services.” And, according to Ellinas, Halliburton, which operate in more than 80 countries, tend to set up management teams but then hire locals to do the work. Over the course of their operation here, the US corporation could thus hire and train hundreds of locals, he said.

Schlumberger, arguably the world’s largest oilfield services company, has its principal offices located in Houston, Paris, and the Hague. In the industry they are known as sub-surface specialists, and develop a lot of the software used to analyse seismic data.

Ellinas sounded a note of caution, however: “We need to encourage oil and gas companies by cutting down on the red tape. These companies may be competing, but they’re also talking to one other. If one of them is unhappy operating in Cyprus, word spreads.”

The Italian-Korean consortium ENI-KOGAS is expected to carry out exploratory drilling in one of their Cypriot offshore licenses in the second half of the year. Already at Larnaca harbour, space has been allotted to Malta-based Medserv, oil and gas logistics specialists, acting as subcontractors for ENI-KOGAS.

Medserv’s facilities in Larnaca could conceivably be used by companies like Halliburton and Schlumberger in the future, said Ellinas.

Noble Energy meanwhile, intend to carry out additional drilling in their Block 12 concession later this year and/or in 2015. In late 2011 the Texas-based outfit discovered gross mean resources of 5 trillion cubic feet of natural gas offshore Cyprus.

Source: Cyprus Mail