Cyprus approves licenses for four off shore gas deposits, before starting talks with four large companies including Total and ENI. The Mediterranean move may increase the tension with Ankara

Cyprus has approved licenses for the exploratory drilling of oil and gas deposits in four blocks off its shores, Commerce Minister Neoclis Sylikiotis has announced, in a move that may increase existing tensions with Turkey in the Eastern Mediterranean.

Drilling permits were approved for blocks 2, 3, 9 and 11, the minister said on Oct. 30.

The decision follows a launch for tenders for a second licensing round that ended in May and covered 12 blocks, Sylikiotis said, adding that decisions on the other eight would be made "gradually." He said the government would negotiate a partnership deal with Italy's ENI and South Korea's KOGAS for blocks 2 and 3. He said terms would be discussed with a French-Russian tie-up involving Total ENP Activities and Novatec for block 9, while Total wants to explore block 11 on its own. Sylikiotis said these negotiations were expected to be completed next year.

U.S. firm Noble Energy has already been awarded Block 12 and announced last year that it had discovered gas reserves of up to 226.5 billion cubic meters at an estimated value of $129 billion.

Turkish opposition

Turkey has protested strongly against the Cypriot government's search for offshore oil and gas, citing it as illegal and retaliating with its own exploratory drilling in the breakaway north.

Cypriot President Demetris Christofias has said the island's offshore oil and gas search would carry on regardless of Ankara's reaction and that any findings would be used for the benefit of all Cypriots. "The reason we decided to go ahead with these four blocks is primarily to create economies of scale given the synergies that will arise to their proximity to block 12," Sylikiotis told reporters.

This may also contribute to Turkish-Israeli tensions due to the developing energy cooperation between Cyprus and Israel. Turkey is already at odds with Israel after a May 31, 2010 Israeli military attack on an aid flotilla bound for Gaza that killed nine Turkish citizens.

Source: bne