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Is This The Most Critical Gas Play In Decades?

Zohr field

Global natural gas is a big opportunity right now. With prices still high in many parts of the world — and competition for projects decreasing with the general downturn in petroleum markets.

And one unexpected spot may be shaping up as the most critical play in decades.

That’s offshore Cyprus. With the tiny eastern Mediterranean island nation this week launching a small, but intriguing bid round — that rumors suggest could end up seeing major interest from the world’s E&Ps.

Cyprus energy minister Georgios Lakkotrypis said last Thursday that the nation will accept bids under its third offshore licensing round starting July 22. A total of just three blocks are on offer — located just south of Cyprus, in waters off Israel and Egypt.

And that may be enough to attract some big bids to this small round.

As the map below shows, that’s because the Cyprus blocks are located within a few kilometers of some of the largest natural gas discoveries of the past years: Egypt’s Zohr field, and Israel’s Leviathan field. The three Cyprus blocks to be offered — 6, 8 and 10 — are highlighted in green, with block 10 being especially close to Zohr.

(Click to enlarge)

Source: crystolenergy.com

Cyprus officials said they’ve been rushing to put this bid round together since details about the Zohr discovery emerged late last year. With energy minister Lakkotrypis saying this week that the government has already received “strong interest” in the blocks on offer.

Given that Zohr is thought to host a massive reserve of 30 trillion cubic feet of natural gas, strong interest wouldn’t be surprising. The really interesting thing will be — who steps up to the plate here?

Up until now, these Mediterranean plays have been dominated by “regional” E&Ps — such as Italy’s Eni, Israel’s Delek Group, and U.S.-based Noble Energy. It will extremely instructive to see if any of the super-majors take a shot at the Cyprus bid round. Or perhaps even Russian firms — with that nation having shown a lot of interest in the geopolitics around Leviathan.

Any such moves could make this area more complex, and more important in the energy big picture. Watch for news on bidders following the July 22 deadline, and for a final award sometime in early 2017.

Here’s to closeology,

By Dave Forest

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