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ExxonMobil gas discovery boosts Cyprus’ energy hopes

The find may revive interest in establishing an LNG plant on the island

Since last October, Cypriots had been holding their breath, waiting for news of ExxonMobil's drilling in offshore Block 10. The result looks promising—it could well be the island's biggest discovery thus far, with the US major saying there is 6-8tn ft3 of natural gas in place in the Glaucus-1 well. The gas-bearing reservoir lies in 436ft (133m) of water.

The Glaucus-1 find follows Eni's announcement last year of the discovery of around 6tn ft3 at its Calypso-1 well in Block 6. The first gas find in Cyprus' offshore, Aphrodite in Block 12 made in 2011, has an estimated 4.5tn ft3 in place. Noble Energy is the operator, in partnership with Shell and Delek Drilling. 

ExxonMobil says that evaluation of Block 10 is continuing. Exploration president Steve Greenlee described the results as "encouraging" in a frontier exploration area, adding that "the potential for this newly discovered resource to serve as an energy source for regional and global markets will be evaluated further". 

International interest in Cyprus' offshore increased substantially in the wake of Eni's 2015 Zohr discovery offshore Egypt, which has more than 30tn ft3 in place. The game-changing discovery was made in a previously unknown carbonate layer, which has subsequently been found off Cyprus and Greece. While Glaucus-1 is not in the same league as Zohr, ExxonMobil will now be thinking about how best to monetize the newly-discovered field and whether there is a sufficient quantity of gas off Cyprus to justify investment in an LNG plant on the island. 

At present, the Cyprus government envisages gas in the country's offshore eventually being exported to Egypt by pipeline. The coming weeks will determine whether the new circumstances lead to a change of strategy, allowing Cyprus to bring its own gas ashore, rather than having to import LNG to meet domestic demand. 

The most logical destination for East Mediterranean gas would be the vast market in Turkey, but geopolitics rules out this option. UN efforts to resolve the Cyprus dispute and allow the reunification of the island have come to nothing. Turkey, for its part, disputes Cyprus' right to explore for gas while the island remains divided. Turkey also does not recognise Cyprus' economic exclusion zone, asserting that this infringes in part on the Turkish continental shelf.

Cyprus' offshore blocks and major surrounding gas fields Source: Petroleum Economist
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