CNOOC In Aphrodite: Boosting Cypriot Hopes

Recent news that China National Offshore Oil Corp. (CNOOC) is negotiating to buy a 30-40% interest in Block 12 of Cyprus' Aphrodite gas field may be a real shot in the arm for the natural gas industry inCyprus, according to Charles Ellinas, CEO at ECP Cyprus National Hydrocarbons Company Ltd.

“It's interesting,” he says. “It's a positive development because it means, more or less, that if successful there's a guarantee the gas from Block 12 will go to China. CNOOC is in a position to invest and they will also be buyers of the gas.”

Mr. Ellinas calls this an optimal situation, recalling that Noble Energy had started the process of looking for suitors like CNOOC last year and by mid 2013 had a shortlist of potential participants. He says that a deal with CNOOC has a reasonable likelihood of happening as the company is well-set financially and interested in LNG, as evidenced by a recently inked 20-year, 1.5 million ton LNG deal with BP.

However, Europe shouldn't worry that all of Cyprus' gas will go to the Far East, according to him, as Block 12 only contains about 5 TCF of gas. Next year, exploratory drilling will show how much gas the other five Aphrodite blocks contain, and indications are good, a substantial portion of which is likely to go to Europe. “Europe is definitely going to be on the horizon for these guys because by 2024-25 the Far East will become largely saturated. But everything will be decided on price.”

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