Bethel Finance: Cypriot minister confirms delay in Block 12 findings

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Bethel Finance news:

The Cypriot government has confirmed a "Globes" exposé about technical problems in the Block 12 well by Noble Energy Inc. (NYSE: NBL), which will delay publication of the findings by a month, until the end of the year.

Two months ago, "Globes" reported that water had seeped into the borehole and premature signs of gas were causing problems in the drilling, and would delay publication of the findings. Noble Energy has not confirmed the report, saying only that 3D seismic survey found 3-9 trillion cubic feet of natural gas at Block 12.

In a speech today at an energy conference in Nicosia, Minister of Commerce, Industry and Tourism Praxoula Antoniadou said that the preliminary findings at Block 12 would be published around Christmas. "This is an insubstantial delay, taking into account that this is an exploratory well, which had minor technical difficulties," she said.

Antoniadou also confirmed that the Cypriot government had approved the requests of Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L) to acquire 30% of Block 12's rights from Noble Energy, Delek's partner in Israeli offshore licenses. She said, "Delek will participate in the rights, but not in the commitments. As far as we're concerned, Noble Energy bears sole responsibility."

Antoniadou said that it was premature to know whether the quantity of gas at Block 12 was enough to justify construction of a liquefied natural gas (LNG) plant in Cyprus. She said that the tender documents for a second round of gas exploration licenses for 12 offshore blocks would be completed by the end of the year. Delek and other Israeli companies will participate in the tenders.

Antoniadou said that many international companies had already purchased the geological studies of the areas, based on 2D seismic surveys of the structures. She said that a Cypriot government team was preparing professional services contracts (PSC) with the rights owners.

Cyprus's tax model on gas discoveries is different from Israel's. Israel levies a 40-50% tax and collects 12.5% royalties on sales from reservoirs. In Cyprus, the rights owner signs a profit sharing agreement on future oil and gas sales.