Large Natural Gas Find 'An Historic Day for Cyprus'

President Demetris Christofias said Wednesday was an historic day for Cyprus after announcing that Block 12 contained an estimated 5 to 8 trillion cubic feet (tcf) of natural gas.

Based on the exploratory drill by U.S. based Noble Energy the prospect, which lies south of the island, contains a gross mean of 7 tcf of gas, Christofias said in a statement live on television.

"The discovery of natural gas in the exclusive economic zone of our country opens great potential for Cyprus and its people, which with prudence and in a spirit of collectiveness, we will utilize in the service of public interest," Christofias said.

"New favourable economic prospects have opened for the future of the country," Christofias added. "Both the present as well as the next generations will benefit."

In its own statement, issued simultaneously with Christofias, Noble Energy said it was "excited" by the find, which it described as "significant".

Charles D Davidson, Noble Energy's Chairman and CEO, said: "We are excited to announce the discovery of significant natural gas resources in Cyprus on Block 12. This is the fifth consecutive natural gas field discovery for Noble Energy and our partners in the greater Levant basin, with total gross mean resources for the five discoveries currently estimated to be over 33 Tcf. This latest discovery in Cyprus further highlights the quality and significance of this world-class basin."

Davidson went on to say, "We would like to thank the Government of Cyprus for their productive cooperation and support in achieving an important outcome for the people of Cyprus and Noble Energy. We look forward to working closely with the Government of Cyprus to develop this discovery in a manner that maximizes value for all stakeholders."

Noble Energy operates the well with a 70 percent working interest. Delek Drilling and Avner Oil Exploration will each have 15 percent, subject to final approval by the government of Cyprus.

Christofias said the discovery held a net natural gas pay of approximately 310 feet. The depth of the drill reached 19,229 feet (5,861 meters) into the seabed at a depth of 5,541 feet (1689 meters), he said. The specific field of hydrocarbons is estimated to extend in an area that covers 103,6 square kilometers.

It will be necessary to undertake one more drilling for a final evaluation before the exploitation of the reserves, Christofias said.

He said that addition to the investments entailed in the gradual development of the necessary infrastructure for the exploitation of natural gas, many foreign investors had already expressed interest in undertaking activities in Cyprus.

"The discovery of natural gas can and should become a tool to promote peace and cooperation in the region. The exploitation of hydrocarbons can become an incentive for a solution to the Cyprus problem, a solution that will terminate the illegal occupation and the illegal colonisation, that will reunify our country and our people, and will restore the human rights and the basic freedoms of our people, Greek Cypriots and Turkish Cypriots alike," said Christofias.

"We appeal to Turkey and we call on her to show a spirit of peace and cooperation, to avoid any adventurous actions and provocations that cause problems in the negotiations as well as tension in the Eastern Mediterranean region"

He said the discovery of hydrocarbons constituted a historic development, which "fills all of us with a sense of optimism for the future."

Turkey has challenged Cyprus's bid to search for hydrocarbons, saying the island has no jurisdiction.

Turkey says it plans to conduct its own hydrocarbon surveys off Cyprus. When Noble started its exploratory drilling in September, it sent its own survey vessel to the area.

Turkish Cypriots reacted coolly to the announcement yesterday. "In our view, the Greek Cypriots should be investing more in the negotiations, and not in things that cause further disputes," said Kudret Ozersay, chief aide to Turkish Cypriot leader Dervis Eroglu.

The gross mean resource range of 5-8 tcf could be a conservative estimate, US based brokerage Sterne Agee said, according to Reuters.

"If we use prior news releases on the Tamar and Leviathan discoveries as a guide, we believe that today's initial resource report by Noble is likely to be conservative, and we would not be surprised to see significant upward revisions in the next couple of years as the project nears production," Sterne Agee analyst Michael McAllister said in a note. Leviathan and Tamar are two fields off Israel.

Proven discoveries could make Cyprus, which now relies almost exclusively on imported and expensive fuel oil to fire its energy grids, self sufficient for decades. The island has estimated needs in gas of 1 billion cubic metres (bcm) per year.

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