ExxonMobil’s commitment to the region is proved by its extension to Egypt and Greece and renewed interest in Cyprus
It has been over two-and-a-half years since ExxonMobil last drilled in Cyprus’ EEZ, but the company is about to come back.
In an interview earlier this month the minister of energy, Giorgos Papanastasiou, confirmed that ExxonMobil is planning a new exploration drilling programme in Cyprus’ EEZ. This will start early next year with drilling of a newly identified, promising, target in block 5, dubbed ‘Electra’, to be immediately followed with further exploration drilling in block 10. Even though initial reports said that the purpose of latter would be to further appraise Glaucus, it now appears that the company intends to explore a new gas target in block 10.
The last time ExxonMobil drilled in Cyprus’ EEZ was in early 2022 when it spud an appraisal well in its Glaucus gas-find. Even though the results have not been published, they were reported by MEES to have been disappointing, with gas reserves estimated to be below 5tcf (trillion cubic feet). The initial estimate, when the gasfield was discovered in 2019, was 5-8tcf.
Following completion of appraisal drilling of Glaucus, the company embarked on a seismic exploration programme in blocks 5 and 10. This appears to have been successful, with identification of a number of potential gasfields. The plan now is to drill two of these.
Should drilling be successful, and depending on the size of discoveries, ExxonMobil would consider three gas export options: sending the gas by pipeline to Egypt, floating LNG (FLNG) or land-based LNG. In the past it said that its preferred option would be a land-based LNG facility at Vasilikos, but that would require gas discoveries of at least 15tcf gas. With almost 5tcf at Glaucus, ExxonMobil’s forthcoming drilling round would need to yield another 10tcf to make this feasible.
Given that drilling and assessment of the results are unlikely to be completed before the end of 2025, and given the time required to evaluate development options, it is likely to be the end of the decade before ExxonMobil would be in a position to proceed with exploitation of any gas finds.
ExxonMobil strategy
In ExxonMobil’s long-term strategy “oil and natural gas remain essential under any credible scenario”, making up more than 50 per cent of the world’s energy mix even by 2050. In this strategy ExxonMobil’s focus is on producing its own LNG, rather than trading that of third parties, and plans to expand its LNG portfolio.
Reflecting this, ExxonMobil’s vice-president exploration, John Ardill, said in a revealing interview that the company “will continue the search for big new oil and gas fields that can help fund alternative energy sources such as LNG and renewables, even as the threshold for committing exploration spending gets ever-higher.” This will be based on a disciplined approach “that entails fully evaluating resources before rushing into projects, for example in the East Med”.
“ExxonMobil seeks a combination of attractive geology, stable political conditions and the potential to minimise the carbon footprint of production processes,” he said.
The company considers gas attractive, “preferably in locations near major markets”. Increasingly it has been looking to invest in “market-led” gas opportunities. He noted that Egypt, where the company is at a relatively early stage, “combines the attractions of a large domestic market and export opportunity alongside other East Med producers”.
Ardill noted that Cyprus is characterised by “a lot of moderate size” discoveries. “There are multiple development options, including modular LNG facilities on the island or a floating LNG facility.”
But he stressed that the first priority is to gain a full picture of East Med resources. “The first thing to do is understand how much resource is there, what the composition of the resource is, what type of rock it sits in, what’s the productivity, and then we come in, once we know that, and look at what’s the best path to development. It’s really around what’s the most cost-effective and lowest environmental footprint.”
ExxonMobil’s strategy has been described as ‘go-big or go-home’, targeting big discoveries. The company has been investing in what it sees as ‘high-risk high-reward’ prospects worldwide, focusing on high-return projects. Its most notable success was offshore Guyana where so far it has discovered over 11 billion barrels of oil.
This strategy is what has made ExxonMobil the most successful oil super-major in the world.
Plans in Egypt
ExxonMobil has a sizable presence in the Egyptian EEZ. Early in 2023 it acquired two new deepwater blocks, Masry and Cairo, adjacent to Cyprus’ blocks 5 and 10. These are in an area characterised by carbonate plays, with the nearby giant Zohr gasfield as the most notable example. Others are Cronos, Zeus and Calypso in block 6, and Glaucus in block 10.
In meetings in August and October with Egypt’s petroleum minister, Karim Badawi, ExxonMobil said that it has carried out seismic exploration operations in blocks Masry and Cairo and is currently evaluating the data. The company is mobilising a drilling-rig for operations in its North Marakia concession in 4Q 2024. This will be the first exploration well drilled in the West Mediterranean region of Egypt’s EEZ. Once this is completed, the rig will move to Cyprus’ block 5.
Given Egypt’s 30 per cent gas production decline over the last three years, it will be looking eagerly for a major drilling success next year.
ExxonMobil extends its presence in Greece
Another demonstration of ExxonMobil’s commitment to the region is its decision to enter into the next three-year exploration period of its offshore ‘South-west-of-Crete’ block. The company has also obtained a six-month extension to its ‘West-of-Crete’ block lease.
Surveys so far have identified natural gas potential that ExxonMobil plans to evaluate during the next exploration period. This will allow the company and its partner Helleniq Energy to complete collection and assessment of 3D seismic data and to identify potential targets for drilling.
In line with its strategy to first “gain a full picture of resources”, the company will not make any commitments for drilling until data acquisition and assessment is completed.
East Med operations
ExxonMobil’s East Med operations benefit from its partnership with QatarEnergy that, in addition to blocks 5 and 10 in Cyprus, it was extended this year to a 40 per cent participation in Egypt’s Masry and Cairo blocks.
At one stage, in 2022, ExxonMobil appeared to be pulling back from the region, but its latest plans demonstrate convincingly that it is back. In line with its strategy to expand its LNG portfolio, the company is now embarking on a major exploration and drilling programme, success of which has the potential to make Cyprus the centre of its operations in the region.
Dr Charles Ellinas, @CharlesEllinas, is a councilor at the Atlantic Council
