Cyprus natural gas: if the Russians aren’t interested, then the Chinese are

Following on from my post highlighting a report in Politis suggesting that Russia’s state-owned energy colossus Gazprom is reluctant to get involved in bidding for an exploration block in Cyprus’ Exclusive Economic Zone for fear of jeopardising its South Stream pipeline deal with Turkey; it’s worth mentioning another article, this time from Phileleftheros, offering its information on which companies and countries are looking to get involved in exploiting Cypriot natural gas.

Thus, according to Phileleftheros, with the encouragement of the Cyprus government, major state-owned Chinese companies – such as PetroChina, Sinopec and Cnooc – are not only interested in bidding for exploration rights in the remaining 12 (of 13) fields, but are also keen to get involved in the building of a liquefaction terminal on the island and in the export from Cyprus of liquefied natural gas.

Phileftheros goes on to say that the Cyprus government would regard the involvement of China in gas exploration on the island not only as a significant boost to Cyprus geopolitically, but would also create a positive climate for any Chinese loan Cyprus might need to secure its economy, now that Cyprus has been shut out of loans on the open market. Already, Cyprus has agreed a loan deal of €3bn with Russia.

Regarding Gazprom and other Russian companies and their potential involvement in Cypriot natural gas exploration, Phileleftheros says that these firms are waiting for the outcome of Russia’s presidential elections on 4 March before they decide whether to bid for exploration rights in Cyprus’ EEZ.

According to Phileleftheros, Lukoil – Russia’s second largest producer of oil – is particularly interested in Cyprus; as are South Korea’s Kogas; Norway’s Statoil; Italy’s ENI; and Brazil’s Petrobas.

As for the defence implications natural gas finds has for Cyprus, there’s been a lot of speculation regarding co-operation between Cyprus and Israel and of an Israeli request to station aircraft at Andreas Papandreou military base in Paphos. The leading Israeli daily Haaretz has added to this speculation by talking (in this article) of a growing ‘military-economic axis between Israel and Cyprus’.

According to Haaretz, not only is Israel in the process of beefing up its navy with new submarines and missile ships to protect its massive energy finds from potential threats from Turkey and Lebanon’s Hezbollah, but to this end it is also lobbying Lefkosia to allow Israel to build an air station in Cyprus.