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COVID-19 to delay Cyprus offshore drilling

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Cyprus Energy Minister Giorgos Lakkotrypis expects the COVID-19 pandemic to affect scheduled drilling in Cyprus’ Exclusive Economic Zone (EEZ), after Exxon Mobil informed the government they will be delaying a planned drill in their block 10 concession.

Lakkotrypis confirmed ExxonMobil has pushed back to September 2021 an appraisal well at the site dubbed Glafcos in block 10 which is bearing an estimated 5 to 8trn cu ft of gas, and is the largest gas discovery to date in Cyprus’ EEZ.

The appraisal drilling scheduled for this summer would have helped the company with its commercialisation decision. A second appraisal operation at the same site, planned for late this year or early next, has likewise been postponed to early 2022.

“They informed us a few days ago that due to the situation relating to the pandemic, and also the state of play in international markets, that they are forced to postpone the drilling by 12 months; on the other hand, the good news is that they remain committed to Cyprus,” said Lakkotrypis.

Earlier, ExxonMobil had announced it was reducing its 2020 capital expenditure by 30% to $23bn in response to low commodity prices resulting from oversupply and demand weakness from the COVID-19 pandemic.

Asked whether the current situation also complicates plans for the EastMed pipeline involving Cyprus, Israel and Greece, Lakkotrypis said it did. Moreover, the minister said the pandemic will most likely affect the other scheduled drills in the Cypriot EEZ, including those by Italy’s ENI and France’s Total.

Confirmation of the delays in drilling came in the wake of the gas hungry Mediterranean country secured new funding for its planned EUR300m ($319m) floating storage and regasification unit-based LNG import terminal.

Cyprus’ parliamentary finance committee approved Euro 43m for the project from the Electricity Authority of Cyprus (EAC). This means about half of the funding has been secured with some Euro 100m already secured from the European Union.

A consortium of China Petroleum Pipeline Engineering, Metron, Hudong-Zhonghua Shipbuilding Group and Wilhelmsen Ship Management has been selected to build the terminal. A Shell-owned, Moss-type LNG carrier, the 136,967 cu m Galea, built 2002, is to be converted into the FSRU for the project.

This month bids are due in for the owners’ engineer, which will oversee construction of the planned terminal due to be operational by 2022.