The Legal 500

Cyprus approved licenses for exploratory drilling to exploit offshore oil and gas deposits in four blocks off its shore. Drilling permits were approved for blocks 2,3,9 and 11. Those interested in searching for hydrocarbons within Cyprus’ exclusive economic zone are Russia, France, Italy and South Korea.

Geostrategic and financial interests regarding gas exploration and exploitation

by Christos Floridis

Regarding the natural Gas Production Prospects in the East Mediterranean, Cyprus, the third largest island in the Mediterranean Sea, is located at the crossroads of big international energy routes unifying Europe with the Middle East, Africa and the countries of the Gulf.

The Republic of Cyprus issued an invitation to all interested persons to apply for hydrocarbon exploration licenses and subsequent hydrocarbon exploitation licenses in respect of certain acreage in the Exclusive Economic Zone of Cyprus.

On Saturday, February 11th 2012, the Official Gazette of the European Community published Notice 2012/C 38/10 of the Republic of Cyprus, regarding the conditions for the granting and the use of Licenses for the prospection, exploration and production of hydrocarbons.

The second licensing round for offshore exploration of hydrocarbons in Cyprus's exclusive economic zone has now officially begun. The invitation to apply for licences was published in the Official Journal of the European Union on 11 February and has subsequently been published on the website of the Ministry of Commerce, Industry and Tourism of the Republic of Cyprus.

The authorities have revealed yesterday that the 2nd licensing round for the exploration and exploitation of the remaining 12 Blocks in Cyprus’ EEZ is expected to be published in the Official Journal of the European Union on Monday 13 of February 2012.

The House of Representatives has ratified on January 27 of 2012 the Framework Agreement between the Republic of Cyprus and the Arab Republic of Egypt relating to the development of cross-median line hydrocarbon resources signed in 2006.

EU labor law in offshore gas-drilling operations has been recently challenged in the case of Salemink v. Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen, in the judgment of the Court’s Grand Chamber in January, 17, 2012.

The Cyprus government has announced that the relevant documentation is being prepared for the second licensing round for the remaining blocks of Cyprus’s Exclusive Economic Zone (EEZ) and that expressions of interest will be invited shortly. The exploration area within Cyprus’s EEZ covers approximately 51,000 square kilometres and is divided into 13 blocks. An exploration licence for one block (Block 12) was awarded to Noble Energy International Limited in 2008 and initial results of test drilling are expected before the end of 2011.

Cyprus's Exclusive Economic Zone

Noble Energy Inc has announced a significant natural gas discovery at the Cyprus Block 12 prospect, offshore the Republic of Cyprus.  

Lorena Charalambous, an advocate of the firm, attended the Cyprus Energy Forum which took place at the Hilton Park Hotel, Nicosia, on the 8th of December 2011.

In 2007, a new Hydrocarbons (Prospection, Exploration and Exploitation) Law was brought into effect, to fully incorporate into Cyprus Law the provisions of EC Directive 94/22/EC on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons.

On January 11, 2007, the Republic of Cyprus announced the: ‘‘First Hydrocarbon Exploration Licensing Round Offshore Cyprus. This is scheduled to be officially opened on the 15th February 2007 and to be closed on the 16th July 2007 . . . The areas open for bidding will be chosen from 12 offshore blocks. The total area covers approximately 70,000 km2 . . .’’

Environmentally sustainable management at an international level requires reliable information on the natural environment, as well as sharing of knowledge on the social, economic, legal and political systems. Environmental impacts of human activities on the deep sea floor are of increasing international concern.

New legislation to present abuses to the disclosure of deals

New rules were adopted September 14, 2011 by the European Parliament to prevent abuses in wholesale energy trading for the final protection of consumers.  According to the legislation, wholesale trading will be monitored independently across the EU, in order to enable Member States to prevent and punish anti-competitive behaviours.

Based on EUROSTAT’s researches, the Republic of Cyprus disposes a very promising feedback from the energy saving and the renewable energy schemes, as more and more people apply for the available funding.

On 18/02/2011, the Cyprus Parliament unanimously ratified an agreement between Cyprus and Israel that defines the sea borders ("Exclusive Economic Zone" - "EEZ") of the two states and allows for the initiation of the exploration process for oil and gas in the Eastern Mediterranean.

The International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (the “Bunkers Convention”) was ratified by the Republic of Cyprus in 2004. The Bunkers Convention provides a liability, compensation and compulsory insurance system in respect of pollution caused by spillages of bunker oil from ships.

On January 11, 2007, the Republic of Cyprus announced the:

“First Hydrocarbon Exploration Licensing Round Offshore Cyprus. This is scheduled to be officially opened on the 15th February 2007 and to be closed on the 16th July 2007 . . . The areas open for bidding will be chosen from 12 offshore blocks. The total area covers approximately 70,000 km2 . . .”

The announcement follows the introduction of modern legislation to regulate the oil and gas sectors and to claim the Exclusive Economic Zone of the island in accordance with the United Nations Law of the Sea Convention.

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