Greek Cypriot Energy Minister George Lakkotrypis last week announced a new deal that had been agreed with a consortium of three gas producing companies – Shell, Noble Energy and Israeli company Delek – also called the Aphrodite Consortium.

The earlier version of the deal provided for the extraction and sale of about 140 billion cubic metres gas to a liquefaction plant in Egypt, but the consortium was unhappy because it was based on a fixed revenue-sharing formula and on the assumption that oil prices, which are indirectly linked to the gas prices, would hover around $70 a barrel.

Some analysts disagreed with this assumption and estimated the oil prices might drop below $70 in the future. Bearing this in mind, the consortium wanted to improve the revenue-sharing arrangement of the first version of the deal.

The modified version of the deal provides that the consortium’s share will increase when the oil prices drop below $70 a barrel, and the government share will increase when oil prices go higher. In other words, the consortium wanted to guarantee its own profits and did not mind giving a bigger share to the government if prices remain high.

In exchange for this improvement, the consortium agreed to start exporting gas in 2024-25. In the first version, there was no obligation to stick to a timetable.

Lakkotrypis said Cyprus would earn $9.3 billion over 18 years. Depending on the fluctuations of the gas prices, this corresponds to about $516 million a year during the life of the project.

He may have hastened to announce this incomplete deal to send a message to Turkish Cypriots that they are going to miss an opportunity if they do not give up their insistence on shared sovereignty of the Republic of Cyprus. The deal is incomplete because the consortium has yet to find a market for gas to be liquefied in Egypt. It is not guaranteed, because the liquefied gas is up to 25 to 30 percent more expensive than the pipe-born gas.

Exploration and extraction of gas became an important subject in Greek Cypriot politics when in 2011 the U.S.-based company Noble Energy discovered rich reserves in the Aphrodite gas field off the southeast coast of the island.

The elephant in the room is Turkey.

After Lakkotrypis’ announcement, Turkish President Recep Tayyip Erdoğan last week said such agreements breach the rights of Turkish Cypriots. “Our kinsmen in northern Cyprus have rights according to international law in the same way that Greek Cypriots have. We will not allow these rights to be usurped by those who have no business (in the region).”

Turkey will likely oppose any attempt to upset the sensitive balance between Turkish and Greek Cypriots’ rights in the island. Although the Greek Cypriots acknowledge the Turkish Cypriots’ legitimate rights and say it loudly, they stop short of committing themselves to guaranteeing it in an internationally binding manner. They prefer to keep this option subject to their volition.

Lakkotrypis’ statement coincided with two other statements coming from France and the United States, and Turkey was not pleased to hear them.

French president Emmanuel Macron said on Monday that France would act in solidarity with Greece, which is threatened in the eastern Mediterranean.

The other statement came from Matthew Palmer, the deputy under-secretary in the U.S. State Department. He said the United States has 10 warships, 130 fighter aircraft and about 9,000 soldiers in the region, and criticised Turkish naval activities off the coast of Cyprus and asked for them to stop.

Both the United States and France make such statements to protect the economic interests of their companies rather than for the sake of international legitimacy.

These narratives and counter-narratives indicate that dark clouds are gathering over the eastern Mediterranean. It does not necessarily mean that a clash is likely. However, in this strained atmosphere, the best course of action for Turkey would be to explain to the international community why the Greek Cypriots have no right to ignore the Turkish Cypriots’ legitimate rights and for the Greek Cypriots, France, and the United States to understand that Turkey will not give up these legitimate rights.

Des entreprises russes et européennes manifestent de l’intérêt pour investir dans le secteur naissant du pétrole et du gaz au Liban, a affirmé la ministre de l’Energie Nada Boustani, dont le pays se lance tout juste dans l’exploration d’hydrocarbures en Méditerranée.

Confrontées à des difficultés économiques, les autorités libanaises misent beaucoup sur ce dossier.

Mme Boustani, 36 ans, dit espérer que «les Libanais vont profiter prochainement de ce secteur, qui ouvre la voie à de nombreux investissements et opportunités d’emploi».

Le Liban a signé en 2018 son premier contrat d’exploration pour deux blocs avec un consortium alliant le français Total, l’italien ENI et le russe Novatek. Les travaux dans le bloc 4 doivent débuter en décembre.

«Nous avons de grands espoirs dans ce domaine», affirme Mme Boustani, dans un entretien mercredi avec l’AFP.

En avril, Beyrouth a lancé un deuxième appel d’offres pour l’exploration de cinq nouveaux blocs, avec comme date butoir janvier 2020.

«Plusieurs grandes compagnies ont visité le Liban», explique Mme Boustani, citant Gazprom (Russie) et Lukoil (Russie). Les compagnies russes sont «très intéressées», selon la ministre, plus jeune membre du gouvernement.

– Différend avec Israël –

Elle a par ailleurs indiqué jeudi sur Twitter qu’elle avait rencontré le chef régional de BP (Grande-Bretagne) qui a dit que sa société était aussi «intéressée» par l’appel d’offres.

Le Liban a en outre reçu des assurances des Etats-Unis selon lesquelles «il n’y a aucun inconvénient à la participation d’entreprises américaines», indique Mme Boustani. «C’est une avancée positive», ajoute-t-elle.

Les rapports avec les Etats-Unis sont en effet parfois tendus, notamment en raison du mouvement chiite du Hezbollah, un poids lourd de la vie politique libanaise, classé «organisation terroriste» par Washington.

En attendant, le Liban doit notamment résoudre des différends sur la démarcation des frontières maritimes avec ses voisins.

Une partie du bloc 9, où des travaux de forage doivent débuter en mai 2020, se trouve dans une zone maritime disputée avec Israël, pays avec lequel le Liban est techniquement en état de guerre. Total a cependant indiqué que la dispute frontalière concernait «moins de 8% de la surface du bloc».

Dans ce dossier, c’est Washington qui fait la navette entre les deux pays pour ouvrir la voie à des négociations et permettre une démarcation de leurs frontières. Pour le moment, aucune avancée n’a été rendue publique.

«Si on se met d’accord sur le début de négociations avec Israël, outre les pourparlers concernant la frontière maritime, il y aura la recherche d’un mécanisme pour partager les champs maritimes communs, sous supervision internationale», avance Mme Boustani.

Le Liban a aussi un problème à résoudre avec la Syrie. Les blocs 1 et 2, concernés par le dernier appel d’offres, se trouvent près d’une frontière maritime dont Damas a toujours refusé de discuter du tracé.

«Il y a certainement moyen (de négocier) avec la Syrie. Il est nécessaire de se pencher sur la question très prochainement», souligne Mme Boustani.

«Le fait que le gouvernement a accepté de mettre les deux blocs (à la frontière) dans l’appel d’offres, signifie qu’il savait qu’un accord serait trouvé» avec Damas, a précisé la ministre.

Mais les divisions au sein de la classe politique libanaise pourraient compliquer les choses.

– Alliances régionales –

Le Premier ministre Saad Hariri refuse catégoriquement toute ouverture vers Damas, tandis que le Hezbollah, allié du président Bachar al-Assad, ou encore le Courant patriotique Libre, le parti du président Michel Aoun, y sont favorables.

«Les Russes pourraient négocier entre les Libanais et les Syriens», estime Laury Haytayan, experte sur la gestion des hydrocarbures au Moyen-Orient, qui précise que Moscou s’intéresse au bloc 2.

Les récentes découvertes de gaz naturel en Méditerranée orientale ont conduit plusieurs pays de la région à multiplier les partenariats stratégiques.

En début d’année, sept pays, dont l’Egypte, Israël et Chypre ont annoncé leur intention de lancer un forum de coopération régionale sur le gaz. Le Liban n’en fait pas partie, en raison de la présence de l’Etat hébreu.

«On a ouvert la voie aux négociations avec Chypre, et on fait la même chose avec l’Egypte», indique toutefois Mme Boustani.

«Il est nécessaire de poursuivre les accords avec ces deux parties, a-t-elle ajouté.

Le Liban et Chypre ont déjà annoncé en avril oeuvrer en vue «d’un accord bilatéral» concernant l’exploitation des ressources énergétiques.

Un accord avec l’Egypte et Chypre permettrait au Liban de sécuriser sa place à l’échelle régionale dans ce domaine, selon Mme Haytayan.

Lebanon remains on track to have its first exploration well drilled in maritime Bloc 4 by December this year, though the schedule is tight, according to an expert closely involved in the field.

Abboud Zahr, Managing Director at DEP Oil and Gas, which is involved in providing services to the companies involved in the planned exploratory drilling, told LOGI that Total – the lead company in the qualified consortium – was set to complete by August three studies required for drilling to commence. These include the Environmental Impact Assessment, environmental baseline assessment and social baseline assessment.

At that point, they must be approved by Lebanese authorities.

In the meanwhile, Total is set to award “at least 20 contracts” for logistics on shore – in Beirut’s port – and for other services and equipment, including for the rig or drill ship that will go about drilling Lebanon’s first ever exploratory well, Zahr said.

“These activities, as they need a long time for preparation, should be awarded very soon, otherwise the December deadline will not be met,” Zahr said.

Once the exploratory drilling commences, it will take about 6 weeks to reach the target point – some 4400 meters below sea level. If gas is found, a second well, known as an appraisal well, will be drilled to determine the quantity and quality of the gas, which would answer the billion-dollar question of whether Lebanon has a commercially viable find.

“To be realistic, the probability to find something in this first well is maximum 25 percent,” Zahr said.

The qualified consortium has committed to drilling at least two exploratory wells in each of the two blocs they have qualified for.

In the case the find is commercially viable, a third well, known as a production well, will have to be drilled, and a large amount of associated infrastructure must be constructed. Before gas can begin pumping.

Zahr estimated that this entire process, in the best case scenario, would require about a decade.

Egypt plans to develop and operate 11 exploration and production (E&P) projects in the oil and gas field during fiscal year (FY) 2019/20 to be in the deep waters of the Mediterranean Sea, the Gulf of Suez, Delta and the Western Desert, Daily News Egypt reported.

The 11 projects are expected to increase Egypt’s production by 2.5 billion cubic feet per day (bcf/d) of natural gas and 32,000 barrels per day (b/d) of crude oil and condensates, said Tarek El Molla, Minister of Petroleum.

Egypt will develop the Zohr natural gas field to reach maximum production, and Raven natural gas field during the third phase of the North Alexandria project. The projects will further include the West Nile Delta, the fields Southwest of Baltim, 9B phase of West Delta, Western Burullus, phase 2 of North Sinai fields, as well as several projects in the Delta.

The projects will further be directed at north-west of October in the Gulf of Suez, the development of the Iris; Qasr and Bat in the Khalda Petroleum Company fields in the Western Desert, and the project aimed to boost marine shipping facilities’ capacity for crude oil for the Western Desert Operating Petroleum Company (WEPCO).

Beirut (AFP) – Russian and European firms are mulling investments in Lebanon’s nascent oil and gas sector as it prepares to launch offshore drilling by the end of 2019, Energy Minister Nada Boustani said.

“Several big companies have visited Lebanon,” she told AFP in an interview.

“We are talking about Gazprom (Russia), Lukoil (Russia), and soon, the (Britain) BP firm is expected to visit,” the 39-year-old minister said in her office in Beirut.

“There is also interest from Total (France), ENI (Italy) and Novatek (Russia).”

US firms have not yet participated in offshore bidding rounds.

But US State Department official David Satterfield told Boustani on Wednesday that Washington “has no problem with US firms participating” in the energy sector, she said, calling this a “positive step”.

Last year, Lebanon signed its first contract to drill for oil and gas in its waters.

A consortium comprising energy giants Total, ENI and Novatek took the first two of its 10 blocks, including one disputed by neighbouring Israel with which Lebanon has fought several wars.

On April 5, Lebanon invited international consortia of at least three companies to bid for five more blocks by the end of January 2020.

On Thursday, Boustani wrote on Twitter that she had met with the regional head of BP who said his company was “interested in the second licensing round”.

Two more of the blocks now up for tender are also adjacent to Israel’s waters.

-‘Negotiations with Israel’-

Israel and Lebanon are technically at war, although the last Israeli troops withdrew from southern Lebanon in 2000 after two decades of occupation.

This has complicated attempts to demarcate land and maritime borders with Israel, which produces natural gas from reserves off its coast in the Mediterranean.

In recent weeks, Satterfield has been mediating in indirect negotiations between the two countries over their disputed maritime border, whose delimitation could affect offshore exploration.

“If we agree on entering talks with Israel, then in addition to negotiations over the maritime borders, we will also discuss ways to divide offshore oil and gas fields,” Boustani said.

Lebanon is set to start drilling in block 4 in December, and later in the disputed block 9.

Last year, Total said it was aware of the border dispute in less than eight percent of block 9 and said it would drill away from that area.

In the wider region, Lebanon is also considering agreements with other neighbours.

In January, representatives of seven Mediterranean countries — including Egypt, Cyprus and Israel — agreed on establishing the East Med Gas Forum, a Cairo-based body that aims to create a regional gas market to benefit member states.

Lebanon refused to take part in the forum because of the participation of Israel, but it has since started working on separate deals.

In April, Lebanon and Cyprus said they were working together towards a deal over adjacent oil and gas exploration zones in the Mediterranean.

– Regional alliances –

“We have made way for negotiations with Cyprus and we are doing the same with Egypt,” said Boustani, the youngest sitting minister in Lebanon’s government.

“We can’t be involved where the Israelis are,” she said, referring to the East Med Gas Forum.

“But nothing prevents us from striking a tripartite agreement” with Cyprus and Egypt, she added.

Laury Haytayan, a Middle East oil and gas expert, says such a tripartite deal is one way for Lebanon to secure strategic regional alliances in the energy sector.

Lebanon may also have to strike a deal with Syria, with which it also has a maritime border dispute.

Two of the five blocks up for bidding until January 2020 border Syrian waters, which may complicate drilling.

“There is certainly room for (negotiations) with Syria, and we need to look into this very soon,” Boustani said.

“When the government agreed to open blocks 1 and 2 for bidding… this means that it knows a deal will be brokered” with Syria, she said.

But divisions among Lebanon’s political class may complicate such an agreement.

Prime Minister Saad Hariri and his Future Movement refuse a normalisation with Damascus.

Syrian regime backer Shiite movement Hezbollah and its Lebanese ally the Free Patriotic Movement, however, are in favour.

Haytayan said Russia may take the lead in negotiations because Moscow is interested in conducting exploration works on block 2.

“The Russians could mediate between Lebanon and Syria and together they will put in place a plan to share resources and outputs,” she said.

While many hurdles still stand in the way, Boustani says she has “big hopes for this industry”.

“The Lebanese will hopefully benefit from this sector soon.”

KARUIZAWA, Japan – The world has an important opportunity to tap into hydrogen’s vast potential to become a critical part of a more sustainable and secure energy future, the International Energy Agency said in a major new report today.

The in-depth study, which analyses hydrogen’s current state of play and offers guidance on its future development, is being launched by Dr Fatih Birol, the IEA’s Executive Director, alongside Mr Hiroshige Seko, Japan’s Minister of Economy, Trade and Industry, on the occasion of the meeting of G20 energy and environment ministers in Karuizawa, Japan. The report – The Future of Hydrogen: Seizing Today’s Opportunities – finds that clean hydrogen is currently receiving strong support from governments and businesses around the world, with the number of policies and projects expanding rapidly.

Hydrogen can help to tackle various critical energy challenges, including helping to store the variable output from renewables like solar PV and wind to better match demand. It offers ways to decarbonise a range of sectors – including long-haul transport, chemicals, and iron and steel – where it is proving difficult to meaningfully reduce emissions. It can also help to improve air quality and strengthen energy security.

A wide variety of fuels are able to produce hydrogen, including renewables, nuclear, natural gas, coal and oil. Hydrogen can be transported as a gas by pipelines or in liquid form by ships, much like liquefied natural gas (LNG). It can also be transformed into electricity and methane to power homes and feed industry, and into fuels for cars, trucks, ships and planes.

“Hydrogen is today enjoying unprecedented momentum, driven by governments that both import and export energy, as well as the renewables industry, electricity and gas utilities, automakers, oil and gas companies, major technology firms and big cities,” Dr Birol said. “The world should not miss this unique chance to make hydrogen an important part of our clean and secure energy future.”

To build on this momentum, the IEA report offers seven key recommendations to help governments, companies and other stakeholders to scale up hydrogen projects around the world. These include four areas where actions today can help to lay the foundations for the growth of a global clean hydrogen industry in the years ahead:

1. Making industrial ports the nerve centres for scaling up the use of clean hydrogen;
2. Building on existing infrastructure, such as natural gas pipelines;
3. Expanding the use of hydrogen in transport by using it to power cars, trucks and buses that run on key routes;
4. Launching the hydrogen trade’s first international shipping routes.

The report notes that hydrogen still faces significant challenges. Producing hydrogen from low-carbon energy is costly at the moment, the development of hydrogen infrastructure is slow and holding back widespread adoption, and some regulations currently limit the development of a clean hydrogen industry.

Today, hydrogen is already being used on an industrial scale, but it is almost entirely supplied from natural gas and coal. Its production, mainly for the chemicals and refining industries, is responsible for 830 million tonnes of CO₂ emissions per year. That’s the equivalent of the annual carbon emissions of the United Kingdom and Indonesia combined.

Reducing emissions from existing hydrogen production is a challenge but also represents an opportunity to increase the scale of clean hydrogen worldwide. One approach is to capture and store or utilise the CO₂ from hydrogen production from fossil fuels. There are currently several industrial facilities around the world that use this process, and more are in the pipeline, but a much greater number is required to make a significant impact.

Another approach is for industries to secure greater supplies of hydrogen from clean electricity. In the past two decades, more than 200 projects have started operation to convert electricity and water into hydrogen to reduce emissions – from transport, natural gas use and industrial sectors – or to support the integration of renewables into the energy system.

Expanding the use of clean hydrogen in other sectors – such as cars, trucks, steel and heating buildings – is another important challenge. There are currently around 11,200 hydrogen-powered cars on the road worldwide. Existing government targets call for that number to increase dramatically to 2.5 million by 2030.

Policy makers need to make sure market conditions are well adapted for reaching such ambitious goals. The recent successes of solar PV, wind, batteries and electric vehicles have shown that policy and technology innovation have the power to build global clean energy industries.

As the world’s leading energy authority covering all fuels and all technologies, the IEA is ideally placed to help to shape global policy on hydrogen.

“We are very proud to have been able to use the breadth and depth of the IEA’s energy expertise to carry out the rigorous analysis for this study in collaboration with governments, industry and academic researchers,” said Dr Birol. “We are grateful to Japan, through its presidency of the G20, for requesting that we carry out this report, which recommends immediate, pragmatic steps to foster hydrogen’s development.”

Beyond this report, the IEA will remain focused on hydrogen, further expanding our expertise in order to monitor progress and provide guidance on technologies, policies and market design. The IEA will continue to work closely with governments and all other stakeholders to support efforts to make the most out of hydrogen’s great potential.

Egypt has signed an electricity interconnection framework agreement with Cyprus and Greece to establish a subsea cable called the EuroAfrica Interconnector linking the three countries.

The agreement was signed on May 22 by EuroAfrica Interconnector Limited CEO Nasos Ktorides and chairman of the Egyptian Electricity Transmission Company Sabah Mohamed Mashal.

According to the project developer, EuroAfrica Interconnector Limited, the 2,000-megawatt cable will be connected from Egypt to continental Europe via Cyprus, making Egypt an energy hub for Africa and link it to the European continent.

The cable will run from Egypt to Cyprus, from Cyprus to Crete and from Crete to Attica in Greece.

Menna A. Farouk, a journalist and an editor at The Egyptian Gazette, writes about social, political and cultural issues, including press freedom, immigration and religious reforms among other topics. On Twitter: @MennaFarouk91

French energy giant Total is considering bidding for new oil and gas exploration concessions in Egypt’s Mediterranean and Red Sea territories, chairman and CEO Patrick Pouyanne told Oil Minister Tarek El Molla in a meeting yesterday, Al Shorouk reports. The company is also looking at increasing investments in expanding fuel stations and fuel transportation.

Oil wells also release natural gas. But it’s burnt off on site whenever the economics of collecting and piping it don’t add up (gas can’t use the existing petroleum infrastructure). What if it could be converted into methanol, says Nichole Liebov at the University of Virginia. She describes a new process called oxyesterification (OxE) that converts methane (the main constituent of natural gas) into methanol cost effectively at low temperatures and pressures. More work is being done to optimise the process and make it scalable. But without such a solution we will continue to “flare” the gas, adding 300m tons of CO2 to the world’s atmosphere annually.

Natural gas, which consists primarily of methane, accounts for nearly one quarter of global energy production. Although the shale gas boom significantly increased the supply of natural gas, natural gas cannot be transported to processing plants using existing infrastructure for petroleum.

Consequently, remote sources of natural gas are in effect “stranded.” Methods to use this “stranded” natural gas productively would be highly beneficial and would reduce unproductive flaring.

The ministry of petroleum has allowed Eni and British Petroleum (BP) to export gas from Zohr and North Alexandria fields through Idku liquefaction factory in accordance with the development agreements of these projects.

A source from the petroleum sector told Daily News Egypt that the government has allowed Eni and BP to export gas after meeting the needs of the local market and achieving production surplus.

He added that Eni and BP’s agreements to develop Zohr and North Alexandria stipulate that the foreign partners can export gas to international markets after obtaining the approval of the ministry of petroleum.

The source explained that the ministry’s decision came after it ensured that the foreign partners will adhere to the development plan of the gas fields.

Foreign companies are keen to export part of their share in concession areas to make bigger profits because the liquefied gas shipments are sold according to international prices.

Italian Eni owns around 26% of the Damietta liquefaction plant after buying 50% of Union Fenosa’s share, which makes it a shareholder of the liquefaction factory.

He explained that Eni increased the production of Zohr gradually to 2.3bn cubic feet of gas per day (scf/day) in March.

The source said that developing the second stage of Zohr field will take place in July, taking total production of gas from 2.7bn scf/day, as estimated in the development plan, to 2.95bn scf/day.

The source said that the price of the partner’s share ranges between $4.2 and $5.88, and is connected to the price of a petroleum barrel in international markets.

The ministry of petroleum is seeking to accelerate production of the next stages in the giant Zohr field upon the instructions of President Abdel Fattah Al-Sisi to speed up connecting the project production to the national grid. Eni increased the field’s production to 2.1bn scf/day with the start of this year.