ExxonMobil edges closer to Cyprus wells despite Turkish threats

12 November 2018
12 November 2018, Week 44, Issue 474

The US super-major is preparing to sink back-to-back wells in Block 10, though Ankara shows little sign of toning down its sabre rattling, writes Gary Lakes in Nicosia

It is ExxonMobil’s turn to test the temperature of the East Mediterranean’s waters. 

The Stena IceMax drillship is due to arrive in the southern Cypriot port of Limassol on November 12 and once outfitted it will proceed to Block 10, some 200 km southwest of the island, where it will drill two back-to-back wells.

Contracted by ExxonMobil, which was awarded a licence for the block by the Cypriot government in April 2017, the Stena IceMax has the capacity to drill in 10,000 feet (3,048 metres) of water. Its first well has been named ‘Delphinos’. 

Attention will now turn to Turkey’s response to the new drilling schedule. 

In January, after making a commercial discovery of around 200 bcm in the Calypso well in Block 6, Eni sent its chartered drillship, the Saipem 12000, into Block 3. But instead of starting another well, the vessel encountered five Turkish warships that prevented it from reaching the drill site, ultimately forcing Eni to abandon its plans.

Turkey claims its continental shelf extends from the mainland south to the west of the island. The claims overlap with Cypriot Blocks 1, 4, 5, 6 and 7. The Turkish-Cypriot administration, meanwhile, claims the offshore area north and east of the island and also an area south and southeast of the island that it has licensed to Turkish Petroleum (TPAO). This claim overlaps with Cyprus Blocks 1, 2, 3, 8, 9, 12 and 13, but does not extend as far south as the Aphrodite gas field, which is near where the Cypriot, Israeli and Egyptian maritime borders meet.

Eni’s discovery at Calypso was south of the area claimed by Turkey, but the planned Block 3 well was in the area that the Turkish-Cypriots had licensed to TPAO, thus giving Ankara the excuse it needed to stop the Saipem 12000.

 

Broad claims

Turkey and the Turkish-Cypriots have claims on all of Cyprus’ offshore blocks with the exception of Blocks 10 and 11. But that does not mean that Turkey will not attempt to interfere with ExxonMobil’s drilling. 

On November 4, Turkish President Recep Tayyip Erdogan issued his latest warning to Cyprus and the companies working in the area: “We will never allow attempts of extorting natural resources in Eastern Mediterranean by excluding us and Turkish Republic of Northern Cyprus [the name adopted by the Turkish-Cypriot administrated area of northern Cyprus]. We do not have an eye on countries’ rights, laws and territories. We only protect the rights of our country and brothers. Just like we let the terrorists in Syria have it, we will not allow the thugs in the seas to run free,” Erdogan said.

Cyprus delimitated its EEZ in accordance with the United Nations Convention on the Law of the Sea (UNCLOS), which Turkey is not party to. Ankara did, however, have to abide by UNCLOS rules when maritime borders in the Black Sea were demarcated, primarily because of the status of its littoral neighbours: Russia, Ukraine, Georgia, Romania and Bulgaria. Off the southern coast of Turkey, the situation is different. Historically, most of the East Mediterranean was part of the Ottoman Empire. 

Cyprus has made it clear to Turkey and the Turkish-Cypriots that the benefits received from future gas sales will be shared amongst all the citizens of Cyprus – and that this would be done within the context of a settlement. The Turkish-Cypriots reject this and argue for a role in the decision-making process regarding all future E&P. This is seen as a risk to the majority in the Greek-Cypriot south, who would see it as opening the door to Turkey to step in and hijack the entire process.

Cyprus has invited Turkey to join it and the other countries in the region involved in energy exploration and development by solving the Cyprus problem and eliminating the obstacles that have so far prevented Turkey’s participation.

Speaking at the 14th Economist Cyprus Summit on November 2, Cypriot President Nicos Anastasiades remarked that Cyprus would have a geostrategic role to play as the hydrocarbon resources in the region are developed.

He said future Cypriot policy would be based on the pillars of respect for international law, creation of opportunity and the conviction that hydrocarbon discoveries would lead to closer co-operation. Cyprus has close relations with all the countries in the region, he said, except Turkey, and said the government would continue with its energy programme, despite Ankara’s provocation, for the benefit of all the island’s legal citizens.

 

Instability game

Nicosia would not be drawn into playing “the instability game” with Turkey over its claiming rights in the Cypriot EEZ, Energy Minister Yiorgos Lakkotrypis said while addressing the same conference. The ministry has been working closely with the licensed companies active in Cyprus’ offshore. The government has also been working to solidify good relations with other East Mediterranean countries in order to establish the geopolitical stability those companies seek to work in, he said. 

Lakkotrypis said the focus was now on further exploration and the monetisation of gas discoveries – those being the Aphrodite and Calypso fields. Plans for new wells in 2019 are under discussion and Block 7 is due to be licensed in the next couple months.

A commercial agreement to pipe Aphrodite gas to Egypt for re-export is also in the works.

The next 12 months will be pivotal in shaping the future energy paradigm for Cyprus and the East Med. How Turkey reacts remains the major risk in play for all participants in the country’s offshore zone.

Edited by

Ryan Stevenson

Managing Editor

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