Cyprus: Cyprus Concludes Second Hydrocarbon Licencing Round

Last Updated: 20 February 2013
Article by Andrea Psara and Kirill Vahonin

In late 2011, Noble Energy International Ltd ("Noble") announced the discovery of an average of 7 trillion cubic feet of natural gas in Block 12 of the Republic of Cyprus' ("Cyprus") Exclusive Economic Zone ("EEZ"), which opened the way to a second hydrocarbons licencing round with the involvement of some major international companies and consortia enthusiastic about exploring and exploiting in the future these potentially vast reserves.

Pursuant to Article 3(2)(a) of the Directive 94/22/EC of the European Parliament and of the Council dated 30th May 1994, Cyprus, represented by the Ministry of Commerce, Industry and Tourism (the "Ministry"), published a notice in the Official Journal of the European Union on 11th February 2012 (Notice No. 2012/C 38/10) inviting interested contractors to apply for hydrocarbon exploration licences and subsequent hydrocarbon exploitation licences. By the expiration of the three month bidding period on 11 May 2012 five companies and ten consortia submitted 15 bids for nine of the 12 remaining blocks. Bids were not restricted to any one block and in total 33 applications for licences were made. The interested contractors bidding in the second hydrocarbons' licencing round are outlined in the list below:

  1. Company: Petra Petroleum Inc (Canada);
  2. Consortium: ATP East Med Number 2 B.V. (US), Naphtha Israel Petroleum Corp. Ltd (Israel), DOR Chemicals Ltd (Israel), Modi 'in Energy Limited Partnership (Israel);
  3. Company: Total E&P Activities Petrolieres (France);
  4. Consortium: Total E&P Activities Petrolieres (operator) (France), NOVATEC Overseas Exploration & Production GMbH (Russia), GPB Global Resources BV (Russia);
  5. Consortium: Premier Oil (operator) (UK), VITOL (UK);
  6. Consortium: Premier Oil (operator) (UK), VITOL (UK), Petronas (Malaysia);
  7. Consortium: Edison International S.p.A. (operator) (Italy), Delek Drilling Ltd Partnership (Israel), Avner Oil Exploration Ltd Partnership (Israel), Enel Trade S.p.A. (Italy); Woodside Energy Holdings PTY Ltd (Australia);
  8. Consortium: ENI (Italy), KOGAS (South Korea);
  9. Consortium: C.O. Cyprus Opportunity Energy Public Company Ltd (Cyprus), AGR Energy AS (operator) (Norway);
  10. Consortium: Oak Delta NG Exploration Joint Venture (US/Israel);
  11. Consortium: Capricorn Oil (UK), Marathon Oil (US); Orange NASSAU Energie (Netherlands), CC Energie S.A.L (Lebanon);
  12. Company: Winevia Holdings Ltd (Cyprus);
  13. Company: RX-DRILL ENERGY CYPRUS LTD (Cyprus);
  14. Consortium: PT Energi Mega Persada Tdk & Frastico Holdings Ltd (Canada/Indonesia/Cyprus); and
  15. Company: Emannuelle Geoglobal Rosario (Israel).


After the application deadline, the Minister from the Ministry (the "Minister") convened a meeting of the Advisory Committee established under Article 6 of the Hydrocarbons Law No. 4(I) of 2007, as amended from time to time (the "Law"), in order to examine each application and to see whether it was submitted in accordance with the provisions of the Law and the Hydrocarbons (Prospection, Exploration and Exploitation) Regulations of 2007 and 2009, as amended from time to time. The Advisory Committee also examined the applications to insure that the information submitted complied with the requirements of the relevant Guidance Note and in order to insure that there was adequate information to make an evaluation of each of the applications. The Advisory Committee was then required to submit a reasoned opinion to the Minister as to whether or not a licence should be granted.

The final decision, however, rests with the Council of Ministers who may within six months from the start of the negotiations on the terms of the Exploration and Production Sharing Contract ("EPSC") grant a licence to a preferred bidder. After successful negotiations with the Council of Ministers, Consortium 8 signed three EPSCs in relation to blocks 2, 3 and 9 and Company 3 signed two EPSCs in relation to blocks 10 and 11. The concession periods will be valid for 3 years with an option to renew for another 2 year period, although 25 per cent of the licenced area will have to be relinquished on each renewal. The evaluation of the remaining bids and applications will continue and it is possible that other licences may be awarded in the near future.

The recent discoveries of hydrocarbons in the Cyprus EEZ and the status of Cyprus as a full Member State of the European Union ("EU") enables the country to contribute to the strengthening of the EU's energy security at a time of high demand for natural gas and at a time where energy diversity is very much on the agenda. The proximity of Block 12 to Israel's Leviathan and Tamar gas fields as a neighbouring lucrative natural gas reserve, and the location of blocks 2, 3 and 9 in the Levantine basin with large gas potential, make liquefaction and export of natural gas by both Cyprus and Israel, through the proposed Cyprus LNG plant, a possibility in the future. It is estimated that construction of the infrastructure to host the LNG plant will not be completed before 2018. Cyprus has also recently taken further steps to strengthen its cooperation with Israel through an agreement that has been reached on around the 11th February 2013 whereby Noble will transfer 30 per cent of its rights held in Block 12 to Israel's Delek Drilling and Anver Oil and Gas Exploration. Furthermore, irrespective of the abovementioned time frame constraints Cyprus may be in a position to exploit its hydrocarbon reserves sooner, as Company 3 will also be looking to drill for potential oil deposits, which if successful, may not require the above infrastructure to be in place in order to deliver oil to its customer as these can be delivered onboard oil tankers.

The latest licencing round is a welcome development for the Cyprus economy as under the EPSC the participating companies and consortia will be required, within three months following the effective date of the EPSC, to establish an office in Cyprus for the whole duration of the licence (in respect of the consortia, the consortium as such and not each consortium member will be required to establish an office in Cyprus). The ability to use and maximize the local workforce is a significant element for the success of the contractors' operations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions