By Philippos Stylianou

CYPRUS this week took one step closer to using natural gas and exploiting its own possible off-shore energy reserves - reported exclusively in the Cyprus Weekly two years ago - when it signed a Memorandum of Understanding with oil-producing neighbour Egypt.

The Memorandum, concluded in Nicosia between visiting Egyptian Oil Minister Amin Fahmy and Commerce and Industry Minister Giorgos Lillikas, covers mainly technical cooperation issues in introducing liquefied natural gas (LNG) to the island, but also paves the way for joint exploitation of oil and gas reserves possibly situated across the delimitation line of the two countries’ exclusive economic zone.

"Cyprus has very good chance to find oil and gas and we are not going to end this cooperation unless we make sure that Cyprus enjoys really the utilisation of gas and oil from Cyprus off-shore or on shore facilities", Fahmi told reporters after signing the Memorandum.

Protocol

He indicated that the two countries could be signing a cooperation protocol to this end in the near future.

Lillikas recalled that Cyprus and Egypt had already delimited their respective economic zones and said: "Egypt is already very advanced in off-shore investigation with positive results, it has a successful experience in extracting and exploiting oil and natural gas reserves, which it is very willing to offer to us and for this we particularly thank our friend the Minister and the Government of Egypt."

Asked to comment on Fahmi’s statement, Lillikas assured that the government was moving in the desired direction in such a way as to safeguard the rights and interests of the State.

According to reports, Egypt has successfully drilled for oil close to the delimitation line with Cyprus, which makes it highly probable that oil and natural gas reserves extend within Cyprus’ economic zone as well.

Former Commerce and Industry Minister Nicos Rolandis during whose tenure Cyprus’ off-shore wealth became an issue, quoted studies and reports according to which the volume of oil and gas reserves around Cyprus, excluding its own which are not yet known, have been estimated at 6-8 billion barrels, worth $330-440 b in current prices.

A reliable official source told the Cyprus Weekly that test drilling was still the only safe method of verifying the existence of off-shore energy reserves. He noted, however, that spiralling oil prices in the international market had made drilling costs less of a consideration. Bore holes in the Gulf of Mexico recently went 3,500 m down, compared to 2,000-3,000 needed for off-shore drilling in Cyprus waters.

Basim Itayim, director of the Nicosia-based Middle East Economic Service specialising in the energy market, said he hadn’t seen any surveys on Cyprus but it made sense that the island had its share of energy reserves in the area.

Chances

He told The Cyprus Weekly the Cyprus Government should take its chances now and go ahead with oil/gas exploration.

The Egyptian Oil Minister also visited Vassiliko where under the newly-signed Memorandum of Understanding it will be helping Cyprus to set up a multi-million energy centre for receiving and deliquefying natural gas.

The centre will also be used to re-export Egyptian LNG brought in by special tankers. Egypt will also contribute to the conversion of Cyprus’ power stations to the use of natural gas.

During his visit Fahmi was received by President Papadopoulos and he also called on House Speaker Demetris Christofias.

In his talks with the latter, the Egyptian Minister said he was looking forward to an excellent cooperation in the oil and gas sectors, adding that there were very good possibilities of using the know-how and expertise that had allowed Egypt in the past two years to export gas, oil and chemicals to many countries.

Fahmi expressed the conviction that in two years time Cyprus and Egypt would be celebrating the good results of their cooperation.