1. Energy
Geopolitics
and Eastern
Mediterranean
Michael J.
Economides
Petroleum Production Engineering • PROF. M. J. ECONOMIDES
©2011

2. The Continuous Energy Crisis
of the 21st Century
Oil almost $150, then fell to below $40…
headlines rule … “crisis”
OPEC has little excess capacity “behind
the valve”, Venezuela, Nigeria, Iraq
China still grows in economy and ener
Oil went over $100 (predicted for late
2010 - early 2011 in March 2010.) Middle
East is the exclamation mark! Will be
back over $100 soon.
NATURAL GAS • PROF. M. J. ECONOMIDES

3. Energy Geopolitics • PROF. M. J. ECONOMIDES

4. Oil & Gas Remain as Primary Energy Sources
Total Energy Other Energy Wind & Solar
MBDOE MBDOE MBDOE
400 60 3.0
Growth Rate Growth Rate
1980-2003, % 2003-2030, % Wind & Solar
350
1.6 1.7 50 2.5
300 1.4
40 2.0
250
Other 1.7 Biomass,
200 30 MSW 1.5 Wind
1.5 1.2
2.7 Coal 11.1
150 2.2
1.5 20 1.0
Gas
100
2.2
5.9 Nuclear 0.8
10 0.5
50
1.0 Oil 1.5
2.2 Hydro 2.1 Solar 9.5
0 0 0.0
80 90 00 10 20 30 80 90 00 10 20 30 80 90 00 10 20 30

5. Energy Geopolitics • PROF. M. J. ECONOMIDES

6. There are no alternatives
to hydrocarbon energy
sources in the
foreseeable future

7. Energy Geopolitics • PROF. M. J. ECONOMIDES

8. NATURAL GAS • PROF. M. J. ECONOMIDES

9. LNG Tanker Underway
Photo Courtesy of BP

10. Globalization of Natural Gas Trade
Source: International Energy Agency and our own work

11. 20-YR LNG EXPORT
CONTRACT WITH BG AND
MORE TO COME
$5.25 BILLION
PROJECT WILL
ALLOW TRANSIT OF
LONGER AND WIDER
SHIPS

12. Energy
Geopolitics
The Axis of Energy Militants
•Iran
•Venezuela
•Russia under Putin
•The quagmire that is Iraq
•China
NATURAL GAS • PROF. M. J. ECONOMIDES

13. NATURAL GAS • PROF. M. J. ECONOMIDES

14. NATURAL GAS • PROF. M. J. ECONOMIDES

15. Russia under Putin
•Bright spot in oil is gone
•Re-Sovietization
•Corruption
•Total control of press
•Investment climate has
cooled down
•Production is bound
to decline
NATURAL GAS • PROF. M. J. ECONOMIDES

16. NATURAL GAS • PROF. M. J. ECONOMIDES

17. NATURAL GAS • PROF. M. J. ECONOMIDES

18. Can
Keep the Lights On?
NATURAL GAS • PROF. M. J. ECONOMIDES

19. NATURAL GAS • PROF. M. J. ECONOMIDES

20. Energy: China’s Choke Point
NATURAL GAS • PROF. M. J. ECONOMIDES

21. China will probably lead
NATURAL GAS • PROF. M. J. ECONOMIDES

22. A Plan for Cyprus and Eastern
Mediterranean Oil and Gas
Michael J. Economides
March 2012

23. Overriding Philosophy
• Investment not welfare giveaways
• Control money influx to keep prices down
• Common Cypriots benefit from:
– Direct investment through the IPO
– Through local companies participating in
exploration and production
– Jobs through re‐investments

24. Levant Basin Prospect Area

25. Bulk Estimates
• Israel, total recoverable: 50 Tcf
• Eastern Mediterranean: 200 Tcf
– USGS estimate
• My own analog for Cyprus: 50‐75 Tcf

26. What is a Tcf?
• Trillion cubic feet
• One billion thousand cubic feet (million Btu)
• 50 Tcf, means that ultimate recovery 50
Billion MBtu, at $8 translates to $400 billion
from just the gas
• Cyprus needs about 100 million scf per day
for electricity. 1 Tcf will provide 27 years of
electricity.

27. Levantine Basin

28. Sequence of NOC events
• Cyprus NOC is launched immediately
– Search for CEO (difficult to find at the required
level) – likely a foreigner – politically problematic
– if Cypriot, will be inexperienced – will need
advising
– Need to staff NOC. Thematic coverage in E&P
• Legal framework of NOC
– Cyprus oil and gas law
– Types of agreements

29. Use Norway Model with Petrobras
Modification
• 70 percent of NOC owned by Cyprus
Sovereign Fund – Council of Ministers, Board
of Directors
• 30 percent into an IPO on the basis of just
the Aphrodite results. London, New York and
Cypriot Stock Exchanges. Should raise $10
billion, minimum
– Use the funds to finance infrastructure and
participate actively in oil and gas development

30. Sequence of Development Events
• Facilitate the immediate construction of 8 in.
gas pipeline from Israel’s Tamar (under fast
development) to transport 100 MMScf/d,
enough for 600 MW of electricity production.
(About $500 million) Delek is interested
• Cyprus targets its zones for commercial
development, not for gas for own use

31. Sequence of Developments (Cont.)
• Unitize with Israel, facilitate aggressively
their LNG development from Leviathan ,
three trains, about 20 MTPA (about 3 Bcf/d) ,
two 36 in. pipelines
– Estimated costs $15‐ $20 billion from
development banks (China Development Bank?)
– Significant security implications for decades
– Neutralizes Turkey