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Massive gas finds off Cyprus announced in New York

At a function held at the Cyprus US Chamber of Commerce in New York, Noble Energy’s CEO announced that the company has discovered much larger quantities of natural gas in the Eastern Mediterranean.

NOBLE Energy has found 35 trillion cubic feet of natural gas in the Eastern Mediterranean basin; a much larger quantity than required to cover the needs of Cyprus and Israel.

The finding was announced by the company’s CEO Charles Davidson at a function at the Cyprus US Chamber of Commerce in New York, where the Cyprus government honoured Mr Davidson and Noble.

Mr Davidson expressed the conviction that a great opportunity is opening for carrying Cypriot natural gas to many European and Asian countries and for Cyprus to improve its relations with its neighbours.

He assured that the Noble team is working in co-ordination with the government of Cyprus in drawing up a plan that will guarantee the transport of natural gas to Cyprus as soon as possible and the building of an installation that will allow exports.

In an address read at the event, President Christofias expressed the gratitude of the government and people of Cyprus to Mr Davidson and Noble Energy, underlining that the natural gas finding in Cyprus’ exclusive economic zone cannot be underestimated. It has massive geo-strategic and political importance for EU energy security as well as promoting peace and co-operation in the Eastern Mediterranean.

Readers' comments

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  • Curmudgeon says:

    Nobody will see lower electricity prices for many, many years, maybe pegged for a year or two but not reduced.

    The only component in the electricity bill that can be reduced is the Fuel Adjustment portion. Today that equates to about 25% of the fixed charges or circa 20% of the inclusive invoice.

    If we assume the gas can be delivered to the generators at half the price of oil then would only give a reduction margin of around 12.5% max.

    Unfortunately, it’s not that simple. There are costs to converting from oil back to gas (I believe the Mari power station was originally designed to burn natural gas but the government of the time would not allow imports so it was converted to heavy fuel oil). The change over back to gas carries a cost and it has to be paid for. This is why I say pegged and not reduced.

    Of course, power generation pollution will be dramatically reduced but unfortunately that is not cashable.

    On a more positive note, I believe liquid gas prices should fall providing it is no longer pegged to the price of crude.

    In summary, as you were.

  • Odd_Job_Bob says:

    Maybe it’s just me, but this sounds awfully similar to one of those scams in the excellent BBC programme “Hustle”…

    Anyway, based on nothing other than I’ve just dusted down my crystal ball (and the wise words of others, many of them below), my set of predictions for what is to befall us (if we take what Noble are saying at face value, which is a MASSIVE “if”. I mean, can you imagine a “we’ve dug for ages at huge expense and found next to nothing. Everyone go home now please”? Would NEVER happen) is as follows:

    – Deals re: how to get the unrefined gas onshore attract all sorts of nice people but a deal is eventually done with someone from an interesting part of the world, through a licence awarded by the rusfetti

    – Tenders to build a nasty, smelly, dirty old gas refinery are submitted and licences are granted by the rusfetti to someone from a similarly interesting part of the world

    – after delays, scandals, bungs, back-handed deals etc, the plant is eventually built using ENTIRELY foreign (let’s say Russian, as a wild stab in the dark) money. In the meantime, Merkozy dies (yay Francois Hollande, I always believed in you!), Greeks reject austerity (both events actually just happened whilst writing, I’m afraid), Germans take their monetary bat and ball away so no-one gets bailed out any more, Euro dies.

    – Cyprus’ whole economy continues freefall until, moments before splatting on the pavement, last-minute Russian money saves the banks, the social security system, the very economic foundations on which Cyprus is based (jobs for the boys in local government). Everyone breathes sigh of relief: picture Prague, Warsaw, Sofia May 1945. Refined gas production eventually starts (say 7 – 10 years min.) and exports abound, rusfetti get paid (again).

    Only two imponderables though: 1) How does a newly resurgent Turkey react? Get in before the Russian influence, do a deal with Russia after? Urge the West to block Russian economic takeover (even though, given the strategic importance of Cyprus, too much urging will not be necessary)? Crystal ball went a bit fuzzy at this point.

    But 2) which is the most scary is this. It took 50 years for the “liberated” Eastern European nations to get the Russians out. Some nations, those caught in the crossfire of Nato “influence” vs Russian “imperialism”, (Georgia, for example), never have.

    How long will it take Cyprus?

  • UBoat says:

    I agree Andrew. Is this more spin carefully engineered. to lure that investment money from Russia?
    I would like to know what BP, Shell or Esso think.

    May be the Cyprus government can build the new gas terminal where the proposed marina development is going to be at Makronissos near Ayia Napa?

    Oh and I bet Turkey will have something to say about it as well?
    I can see trouble ahead on this …

  • Alex says:

    The main problem in Cyprus at the moment is the GAP between future gas-fuelled paradise and current economic situation. The country simply does not have these 5 years of “waiting period”. Laiki will probably implode in the next 2 months. This will require bail-out from the government. The government, having no money, will have to turn for its own bail-out to EU. Therefore by the time first gas revenues materialize their primary destination would be paying off the debts.

  • Alex says:

    As far as I remember, local power stations cannot use gas and it will take years to readjust them to “new” fuel. So no decrease in electricity bills in the next 5 years, I am afraid.

  • Clive says:

    I suspect that much of this gas has already been spoken for already. aka, Russian loan.

    With tongue in check; if they power the power stations with gas will the citizens of Cyprus get much lower electricity prices?

  • Steve says:

    I think a few predictions are in order. Within 5-10years

    -the cost of living will rise dramatically on the back of a state benefits boom, coupled with large increases in state salaries and state employment.

    -economic and political refugees will be adjusting their travel plans away from Mainland Europe to Cyprus, together with a lot of EU citizens.

    -there will be an economic boom and unemployment will fall as the government uses cheap energy and grants to attract business investment.

    -there will be a property boom and prices will rise significantly and well above those in the past.

    -Cyprus will have enough money to compensate the banks for fixing the mortgages and title deeds issues, but will choose not to do so.

    -There will be some form of ultimatum from Turkey.

  • andyp says:

    I suspect you may be right Andrew.

    The usual suspects will start queuing again at the BMW Kiosk and the ordinary Cypriot will get a big fat zero.

  • Andrew says:

    It would be nice to think that the ordinary residents of Cyprus will be able to benefit from this find. How wonderful it would be if the price of Electricity and Gas would come tumbling down.

    Maybe I am just being cynical, but I suspect that a few will get very rich and the majority of ordinary citizens will see their assets squandered while prices continue to rise.

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