Italy eyes Cyprus oil and gas drilling in 2014

Italy's ENI said on Thursday it expects to start exploratory drilling for gas and oil off the east Mediterranean island of Cyprus in mid-2014. "We are focused on gas and I believe it is gas, but there might be oil as well... we expect to drill our first well in 2014," said ENI CEO Paolo Scaroni after talks with President Nicos Anastasiades. Cyprus Energy Minister George Lakkotrypis said: "We discussed the company's schedule, about the seismographic surveys and the first exploratory drilling which they intend to do within 2014." He said ENI was also interested in investing in an LNG plant - depending on how much gas it finds -- which the government is planning to construct. Last month the cabinet approved a move to sign a memorandum of understanding with a US-Israeli partnership to build an LNG plant to exploit the island's untapped energy wealth. In June US firm Noble started confirmation drilling off southern Cyprus to ascertain whether there is enough untapped gas to make the venture commercially viable.

Based on initial test drilling in 2011, the estimated amount of gas in Block 12 is 5-8 trillion cubic feet (142 billion-227 billion cubic metres), with a mean of seven trillion cubic feet, the Houston-based company said.

Israeli firms Delek Drilling and Avner Oil Exploration each own 15 percent of the US project. Neighbouring Israel has uncovered huge quantities of gas and hopes to use Cyprus as a platform to export to Europe.

Almost bankrupt Cyprus is hoping its untapped offshore energy resources can pull it back from the financial brink. Nicosia is hoping to commercially export its gas, and maybe oil riches, by 2020. The government has granted permits to international prospectors after Israel discovered massive offshore gas deposits in 2010. Noble made the first find off southeast Cyprus in 2011 near the Israeli maritime boundary, in a test well named Aphrodite-1 after the mythological goddess of love. Nicosia hopes its gas deposits will help it climb out of recession and quickly recover from a harsh bailout deal which hit its banking sector hard. The government has played up the potential of the gas windfall, estimating it at 60 trillion cubic feet, but this figure has yet to be verified. It will also take several years for revenue to be generated. Cyprus has also signed additional exploration agreements with French energy giant Total and a consortium between ENI and South Korea's Kogas.

Lakkotrypis on Thursday confirmed the government planned a third round of licensing on remaining blocks, but that no date had yet been decided. cc/srm