Noble Energy Inc.’s plans to develop as much as 8 trillion cubic feet of natural gas off the coast of Cyprus may be complicated by a dispute with Turkey over development of the field.
The discovery may hold 5 trillion to 8 trillion cubic feet of gas, Houston-based Noble Energy said today in a statement. The field, which lies in the Mediterranean Sea between Cyprus and Israel, covers 40 square miles (100 square kilometers) and requires more appraisal before development, the company said.
Turkey doesn’t recognize the Greek Cypriot government and in September sent an exploration vessel accompanied by warships and fighter jets to the area after Noble started drilling. Cyprus is divided after Turkey invaded the northern third of the island in 1974. Development projects should await resolution of the island’s political status, Turkey has said.
“The politics are going to get more and more complicated as you get closer to development,” said John Malone, an analyst at Global Hunter Securities LLC in New York.
United Nations Secretary-General Ban Ki-Moon summoned Cyprus President Demetris Christofias and Dervish Eroglu, the leader of the Turkish Cypriot community, to New York for a new round of talks in January to reunify the island.
The gas discovery is in his nation’s “exclusive economic zone,” Christofias said at a press conference in Nicosia today. “Cyprus is coming into Europe’s energy map with prospects of substantially contributing to the EU’s energy security.”
The U.S. Geological survey estimates that the Levant Basin, a triangular slice of the Mediterranean lying between Cyprus and Israel, may hold 122 trillion cubic feet of gas. Noble Energy discovered about 9 trillion cubic feet of gas at the Tamar field in 2009 and as much as 20 trillion cubic feet at the Leviathan field in 2010, both off Israel.
The Cyprus field is the first discovered off the nation’s coast. At current gas prices of about $4 per million British thermal units, the find would be valued at $32 billion, said Constantinos Hadjistassou, an energy researcher at the University of Cyprus.
Noble Energy operates the Cyprus well and owns a 70 percent share. Delek Drilling-LP and Avner Oil Exploration LLP each hold a 15 percent stake, it said.
Noble Energy fell 1.7 percent to $94.02 at the close in New York. Expectations for the Cyprus field were high, Michael Hall, an analyst at Robert W. Baird & Co., wrote in a note to clients, and “were recently increased following the upgrade of Leviathan potential and rumors that Cyprus could represent Noble’s largest eastern Mediterranean prospect.”
Avner climbed to the highest level since April 28, advancing 2 percent to 2.418 shekels at the close in Tel Aviv. Delek gained 1.6 percent to 14.15 shekels, the highest since Jan. 17.
Cyprus’s government announced a second oil and gas licensing round on Nov. 23 that will cover 12 of 13 blocks in the ocean south of the island. Turkey said on Dec. 9 it will begin exploring for oil and gas off the northern part of Cyprus it controls within two months.
With enough to supply Cyprus for 150 years, gas from the Noble Energy discovery will be exported from the Mediterranean to Western Europe, said Pierre Godec, an oil-industry consultant. Exports will be complicated by historic tension among Cyprus’s Greek community and Turkey, said Godec, a former managing director of Elf Exploration UK Plc.
A pipeline for exports would have to be connected to systems that cross Turkey, he said. A plant to liquefy the fuel and ship it overseas would probably process gas from fields in Cyprus and Israel, Godec said.
“The whole area has good prospects for some more discoveries,” he said. “That is going to change substantially the whole profile of Cyprus for the next five to 10 years.”