The Offshore Discovery in the Republic of Cyprus – Monetisation Prospects and Challenges

This paper assesses the prospects and challenges facing the Republic of Cyprus in developing the discovery of a significant offshore gas field by Noble Energy in December 2011.

This discovery came close on the heels of the major discoveries in adjacent offshore Israel, further astounding the international upstream exploration and production community who had largely overlooked the prospectivity of this area. For the Republic of Cyprus, whose economy is dominated by tourism and the service sector and overshadowed by Eurozone economic malaise, this discovery offers lower domestic energy costs and substantial export revenues. However, as is often the case with unexpected fortune, decisions on how best to develop such a resource for the benefit of a nation with a history of inter-ethnic tensions are not straightforward and further complicated by Cyprus’ geographic and geopolitical setting.

Anastasios Giamouridis describes the status of the Aphrodite field and juxtaposes the logical process of progressively defining options for the development of the field and the export strategy for gas produced in excess of Cyprus’ modest current and future consumption needs with the rising expectations, not just of the Cypriot government but also neighbouring countries with either aspirations to share in this source of hydrocarbon wealth or openly disputing Cyprus’ sovereign hydrocarbon ownership rights. Anastasios introduces the pros and cons of future unitisation and joint development with Israel and examines the institutional capability of the Cypriot government to guide the monetisation of the resource at a time when it is also focused on Cyprus’s EU Presidency in the second half of 2012.

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