Geopolitical and Economic Developments in Cyprus – How can you benefit?

New York Hilton Hotel/Gibson Room
1335 Avenue of the Americas, New York, NY
Friday May 4th 2012 – 3:00-5:00 pm

Opening Remarks:
Vassos Vassiliou, President, Cyprus-U.S. Chamber of Commerce

Moderator:
James C. Hansel, MSCS, CFA , Senior Advisor, Red Apple Group

The Panel:
Abacus Global Business Services – Cyprus
Constantinos Chiotis, Senior Manager | Abacus Ltd

Noble Energy
Terry Gerhart, Vice President of Noble Oil

PricewaterhouseCoopers – Cyprus
Nicos Chimarides PwC | Partner in charge of Direct Tax Services

U.S. Department of Commerce
Anastasia Xenias, Senior International Trade Specialist

This Panel Discussion will precede the Chamber’s Annual Award Dinner which is scheduled for 6:30pm. The Panel Discussion is complimentary to those attending the Annual Award Dinner and to Chamber Members, however reservations are required. If you would like to attend the Chamber’s Annual Award Dinner honoring Noble Energy and its CEO Charles D. Davidson.

Refreshments will be served RSVP: director@cyprususchamber.com

Leonid Mikhelson, Novatek’s billionaire chief executive officer, flew to Cyprus for talks yesterday, Neoklis Sylikiotis, Cyprus’ commerce and industry minister, told reporters in Nicosia today. The country is accepting applications for a second licensing round until May 11.

Houston-based Noble Energy Inc. (NBL) reported the first discovery off Cyprus’s coast in December, with results from the Cyprus A-1 well indicating as much as 8 trillion cubic feet of gas. The find prompted “a lot of interest” in the area, Sylikiotis said.

Cypriot President Demetris Christofias also met with Mikhelson and a Russian delegation including OAO Gazprombank Chairman Andrei Akimov, said Phidias Pilides, the chairman of the Cyprus Chamber of Commerce and Industry.

Novatek’s press service confirmed the company is considering participating in the announced tenders.

The Siberian company’s natural-gas production and sales are now limited to Russia where state-run OAO Gazprom (GAZP), the world’s biggest producer, controls the pipeline network and exports. Novatek ended a concession agreement last year to its only exploration project outside Russia, the El-Arish project in Egypt, after drilling didn’t find commercial prospects.

2012 Distinguished Merit Award recipients

NEW YORK, March 20, 2012 – The Cyprus-U.S. Chamber of Commerce is pleased to announce that Noble Energy and Mr. Charles D. Davidson, Chairman & CEO, are the Chamber’s 2012 Distinguished Merit Award recipients.

Bestowed annually, the Award honors corporations and individuals who have raised the profile of Cyprus and made an extraordinary contribution to Cyprus-U.S. relations through their business endeavors. The Cyprus-U.S. Chamber of Commerce’s tribute to Mr. Charles Davidson and Noble Energy will include an Awards Dinner at the Hilton New York on Friday, May 4, 2012.

“On behalf of Noble Energy, I am delighted to receive the 2012 Award from the Cyprus-United States Chamber of Commerce,” Mr. Davidson said. “It’s not very often you get to be part of an exploration venture that has the potential to dramatically change a country’s energy supply. We are extraordinarily proud of the cooperative effort between Noble Energy and Cyprus that will allow us to apply our sophisticated technology in an effort to move Cyprus closer to energy independence.”

“We are very excited about the 2012 Awards Dinner event, and truly proud to have Mr. Davidson as our 2012 Award recipient,” said Mr. Vassos Vassiliou, President of the Cyprus-U.S. Chamber of Commerce. “Noble Energy’s contribution to the development of Cyprus’ economy is immensely important and extends beyond assisting the island in becoming energy independent. These natural gas discoveries are going to drive international investors to position themselves firmly as this new era unfolds for Cyprus and the region. Over the medium to long term, we expect to see substantial investments in infrastructure and revenue coming from the sales of hydrocarbons, and Noble Energy will be strategically and fundamentally important in helping the Republic of Cyprus achieve these goals.”

Charles D. Davidson, Chairman and CEO
Charles (Chuck) Davidson has more than 35 years of energy industry experience. Mr. Davidson joined Noble Energy in October 2000 as chairman and CEO after serving as chairman, president and CEO at Vastar Resources, Inc. A member of the original executive team that formed Vastar in 1994, he previously held a number of engineering, operations and executive positions at ARCO. Active in numerous industry and trade organizations, Mr. Davidson is currently serving as chairman of the Independent Petroleum Association of America’s Offshore Committee. He serves on the Board of the Gas Technology Institute, on the Advisory Board of the University of Texas in Dallas and with several Houston community organizations. He is also a board member for the Society for the Performing Arts and the Offshore Energy Center. Mr. Davidson has a bachelor’s degree in chemical engineering from Purdue University and a master’s degree in management from the University of Texas in Dallas.

Noble Energy
Noble Energy (NYSE: NBL) is an independent energy company engaged in worldwide oil and gas exploration and production.. In addition to significant operations onshore in the U.S., in the deepwater Gulf of Mexico and offshore West Africa, Noble Energy is the leading E&P operator in the Eastern Mediterranean, having discovered an estimated 35 Tcf of natural gas resources in the Levant Basin located offshore Cyprus and Israel. These discoveries include an estimated gross mean of 7 Tcf offshore Cyprus. Noble Energy and its partners are now leading efforts to bring these resources to market so that countries within the Eastern Mediterranean region can achieve energy independence and grow into exporters of natural gas.

The Cyprus-U.S. Chamber of Commerce
The Cyprus-U.S. Chamber of Commerce was formed as a Not for Profit corporation in 1997 to promote and extend commercial, industrial and economic relations between the Republic of Cyprus and the United States. By creating a forum in which its members share ideas and knowledge, the Chamber presents opportunities to potential investors, offers advice on foreign investment projects, coordinates briefings with private and government officials, and works to build strong relationships between Cypriot and American companies and their employees, owners and other constituents. The Chamber maintains a diverse membership of corporations, entrepreneurs, executives, and professionals across all fields of commerce

For more information contact:
Despina Axiotakis
director@cyprususchamber.com
201.444.5609

Download invitation: Chamber Invitation Dinner 2012

♦ American Hellenic Institute – New York Chapter (AHINYC)
♦ Cypriot Youth Committee of America (CYCA)
♦ Hellenic American Chamber of Commerce Young Professionals (HACC YP)
♦ Hellenic American Bankers Association (HABA)
♦ Hellenic American Lawyers Association (HLA)
♦ Hellenic Organization of University Graduates of America (HOUGA)

Your company is invited to participate at our annual Career Fair being sponsored by the Cyprus-U.S. Chamber of Commerce and it’s co-sponsors on Thursday, April 19, 2012. This year your participation is even more important because of the economic crisis facing our Hellenic community throughout the world. Your participation would be a further measure of our community’s commitment to those in need of employment.

This fair is being organized to bring job candidates and employers together to discuss potential employment opportunities. There is no cost to your company for attending.

The event will be held at the Cathedral Center Ballroom, 337 East 74th Street, New York from 4:30 pm to 7:00 pm. Table and chairs will be furnished, however you need to bring your own displays and materials. Please make known any special needs you may have, so we can accommodate you. Refreshments will be served.

If you are interested in attending or need additional information, please contact Despina Axiotakis, Executive Director at the Cyprus-U.S. Chamber of Commerce, (201) 444-5609, Fax: 201-444-0445 or e-mail: director@cyprususchamber.com by April 10, 2012.

Sincerely,
Cyprus-U.S. Chamber of Commerce

Vassos N. Vassiliou
President
Peter Kakoyiannis
Event Chairman

Download Application Form

Speaking during a ceremony where he was honoured by the Employers’ and Industrialists’ Federation, Mr. Pissarides defended the island’s banking system stressing that “the Cypriot banks have a very good basis, for this, they are a very good investment for the foreign investors”.

“Except for their good basis, they have very-well trained staff and good branch network for the commercial world and the consumers”, he added.

“The banks currently face liquidity problems. Any foreign investor who will be smart enough to invest money in the Cypriot banking system will walk away with a lot of profits in three years”, he noted.

“With those prospects, I do not seen anyone not wanting to invest in the Cypriot banks”, he emphasized.

Despite the turbulence of the Arab Spring and Turkey’s efforts to emerge as its guiding light, the discovery of significant amounts of natural gas in the eastern Mediterranean has made Israel and Cyprus see enhanced relations as less of a symptom and more of a cure.

Israeli PM Benjamin Netanyahu’s one-day visit on Thursday answered a number of questions, while opening the door to dozens more. Is Israel serious about improving relations with Cyprus? Yes.

It sees little point in competing with a neighbouring, now friendly country, on energy. Combining forces makes sense as it gives both countries more power over who they sell to, how much for and at what cost. And it is obvious to the Israelis that the decision-maker in Cyprus is one, President Demetris Christofias, hence the high-profile visit.

Does Christofias feel the same despite internal rumblings within his traditionally pro-Palestinian party? It appears so. The fact he invited all party leaders to the lunch hosted for Netanyahu, providing the semblance of a united domestic front, adds weight to this view.

He also pledged to sort out his own house and ensure the joint energy committee set up by both governments meets more frequently than twice in a year.

But as the two mull over how to jointly exploit their respective hydrocarbons, one thing becomes apparent. Neither country is quite clear yet on the best way to go about it.

Commenting on the blossoming partnership, a diplomatic source told the Sunday Mail: “This is just the beginning of the beginning.”

Both countries are new to the oil and gas game and have little experience. Energy infrastructure costs billions of dollars, requires long-term strategies, plenty of know-how to set up and operate and find the means forprotection.

The US-based Noble Energy, with offshore concessions in both countries, is considered a small-to-medium-sized player while none of the ‘big fish’ in the international energy industry have yet to show any tangible interest.

The decisions to be taken in the coming months and years will have a clear impact on the region, making political and strategic formulations central to any game plan.

While Turkey continues its sabre-rattling over exploration, Cyprus has been keen to stress its new-found importance to Europe’s energy security.

Speaking before the EU Energy Council earlier this week, Commerce Minister Praxoulla Antoniadou said the recent discovery of natural gas in Cyprus’ exclusive economic zone (EEZ) “could contribute to the enhancement of energy security of Europe”.

Two days later at the presidential palace in Nicosia, Netanyahu highlighted there was still much to decide in terms of whether totransport and sell gas to Europe via Cyprus or put it through a liquefaction plant in Israel and on to Asian markets.

Israel is undecided on this, with opposing views within the government on the best way forward.

The latter option clearly makes Cyprus’ potential gas find of seven trillion cubic feet less important to European energy security.

However, there are valid arguments in favour of selling to Asian markets. Cyprus-Turkey relations remain at the non-existent level of past decades, making energy collaboration a non-starter. While combined finds ofIsraeli and Cypriot gas could represent the injection needed to get the EU-Turkey Nabucco pipeline running, the chances of this triangular miracle remain slim even to the most unblemished optimist.

So, any project to exploit and sell gas to Europe willinevitably be considered in competition with Turkey’s efforts to establish itself as a crucial energy transit point. Which brings us to another key power in the region, Russia.

Neither Cyprus nor Israel really wants to step on Russia’s toes, with its imprints all over energy supply lines to Europe. In Cyprus’ case, there has been much speculation over what it is willing to give in return for Russia’s continued support of the island state, both diplomatically andfinancially. If Cyprus chooses not to go the Asian route, what incentives will it give Russia to support its sovereign right to exploit resources?

A few trillion cubic feet of gas do not amount to much but combined with Israel’s finds and further potential discoveries, new gas flows to Europe could be a potential annoyance to the energy giant.

Might this be a significant factor in calculations on who gets control of the taps in a future liquefaction plant at Vassiliko?

As another diplomatic source put it, “Both countries are islands, Cyprus geographically and Israel politically. They need support.”

These pressing issues will have to be dealt with, along with questions on whether to utilise floating liquefaction units, or build pipelines and a permanent land-based terminal. And if so, where?

It appears neither country has taken any concrete decisions yet. A special committee is expected to deliver an energy policy for Israel in the coming weeks. It is less clear when Cyprus will carve out a strategy. But until both clarify what their interests are, they cannot decide on how to work together.

In terms of relations with Cyprus, Israel wishes to maintain them at their current “peak” and not let them get diluted by other interests. By other, think Turkey, Arab states, the Palestinians and Russia.

According to one source, the potential for energy collaboration exists on many levels. Cyprus, Israel and Greece are also examining the prospect of an undersea electricity cable connecting Israel to Europe. But this potential stands independent of other considerations.

It is considered a given that should Turkey wish to resume normal relations with Israel today, Israel is ready.

“Israel is not expecting Cyprus to stop cooperating with the Arab states and it hopes Cyprus is not asking it to forever be enemies withTurkey or go against Israel’s interests on the Palestinian issue,” said the source.

At the same time, if the two decide to join interests and forge their way together in the energy sector, the sheer level of cost and commitment involved leaves little room for a change of heart.

“This is definitely a strategic decision. There’ll be no going back. It’s a Catholic marriage.”

The fact Israel entertains the idea of an energy ‘marriage’ to Cyprus raises the question of whether it finds Turkey’s threats over exploration worrisome at all.

Since the focus of enhanced relations is on energy, and not security and defence as some reports claim, does this mean Israel considersTurkey’s threats empty, or is it a case of ‘not our problem’?

In the meantime, Peter Wallace, an energy consultant who has overseen the building of some of the largest liquefaction plants in the world, raises another point.

With all this talk of long-term strategies to export surplus gas, who’s thinking and planning for bringing cheap natural gas to Cyprus for domestic use?

“The island needs gas now. Decisions have to be taken. The EU has rapped Cyprus’ knuckles twice over not doing enough to come up with a decent energy strategy which they were supposed to have done,” he said.

“You are paying through the nose for electricity using liquid fuels. You have the most expensive electricity in Europe.”

But that’s another story for another day. Switch the lights off on your way out.

In December, Texas-based Noble Energy, which is working with both countries, reported an offshore gas prospect of between 5 and 8 trillion cubic feet (tcf) in a Cypriot field. The nearby Leviathan gasfield within Israel’s exclusive economic zone (EEZ) holds twice as much reserves and is a year ahead in production plans.

Turkey, which invaded north Cyprus in 1974, challenges the island’s jurisdiction to explore. On Wednesday, Ankara said new exploration attempts by Nicosia could escalate tension in the region. Relations between Israel and Turkey, once close allies, have been strained in recent years, but Netanyahu appeared to have no inclination to get dragged into Ankara’s row with Cyprus.

“I came here to develop our bilateral ties, our economic ties in the field of energy,” he said after talks with Cypriot President Demetris Christofias. The two states were looking at a gas-sharing agreement to exploit reserves which fall on the maritime boundary between them, and gas delivery methods, he said.

“We are interested in developing peaceful relations for the benefit of the two countries and of the region as a whole. We have no ulterior motives and no hidden motives.” Another project that has been proposed to both leaders is a 540-nautical mile subsea cable to be built by Cyprus-based DEH-Quantum Energy at a cost of 1.5 bln euros and will transport electrical energy from Israel to western Europe.

TURKEY

Ankara said on Wednesday that Greek Cypriots were encroaching on Turkey’s continental shelf in declaring a new hydrocarbons licensing round that opened on February 11 for 12 offshore blocks. They all rim the southern part of the island.

“Turkey .. will take all necessary measures to protect its rights and interests in the maritime areas falling within its continental shelf,” the foreign ministry said.

Ankara has urged Greek Cypriots to scrap their exploration plans pending a reunification deal on the island. Reunification talks are under way and United Nations mediators are keen for a deal this year, preferably before Cyprus takes on the presidency of the European Council on July 1. Cyprus says it is within its rights to explore for hydrocarbons, even while the island remains divided.

“It is not we who threaten Turkey, but Turkey which threatens us,” said Christofias. “This is the problem. Turkey is the troublemaker, and not the cooperation between Israel and Cyprus.”

It was also published in the official journal of the EU last week.

Applications for the explorations must be submitted within 90 days of its publication in the EU journal. Meanwhile, Antoniadou has questioned the reliability and confidentiality of the disciplinary investigation conducted into energy chief Solon Kassinis, with whom she has had a highly publicised dispute since stripping him of decision-making powers last year.

She was referring to a report in Phileleftheros yesterday saying that none of the charges against Kassinis stand, be they disciplinary or criminal. “I felt quite curious when I read the results of the disciplinary investigation,” said Antoniadou referring to the article.

According to Antoniadou, the envelope containing the results of the investigation arrived at the ministry on Friday but she had not read it yet due to her workload on the second round of licensing. Antoniadou said that since the results are being released in the media first before they get to the relevant minister – herself – she will deliver the sealed envelope to the Cabinet and then allow ‘things to take their course.’

Antoniadou requested at the end of 2011 that the Cabinet conduct the enquiry against Kassinis on the grounds of leaking confidential government documents.

Moreover, an official from Shell, who wished to remain anonymous, said that he did not want to comment on this issue, but Shell Turkey had no relation with Rixoh Ltd. Yeni Duzen reports that Shell Turkey is expected to issue a statement on this matter within the forthcoming days.

On 5 January 2012, Yeni Duzen had reported on its front page that Shell, BP and Esso companies would come to the occupied area of Cyprus and published a statement by the Turkish Cypriot businessman Mehmet Salih Karalim, partner of Rixoh Ltd who had said that Halis Bektas, owner of Rixo International and big partner of the project, had meetings with companies such as BP, Shell and Esso and that no one of these companies had any reservations for doing business in the occupied area of Cyprus.

Netanyahu, making the first visit to Cyprus by an Israeli prime minister, said today that he and President Demetris Christofias discussed a variety of ways that the two countries can work together in energy exploration, agriculture, tourism and science. Both leaders declined to speak publicly about proposals for military cooperation.

“We are looking at the possibility — we haven’t taken a decision — about a 40-kilometer pipeline between the two findings” off the coast of Israel and Cyprus, Netanyahu said at a press conference with Christofias at the Presidential Palace in Nicosia. He said gas could be liquefied in either Cyprus or Israel and exported to Europe or Asia.

The two countries have discovered quantities of offshore gas in the past two years estimated to be worth billions of dollars in exports. Turkey and Lebanon are demanding pieces of the natural gas bonanza that a group led by Houston, Texas-based Noble Energy Inc. discovered off the coasts. Israeli Energy Minister Uzi Landau, who accompanied Netanyahu to Cyprus, has said his nation is willing to use force to protect its gas field from outside claims.

Iran Sanctions

Netanyahu also said today that sanctions imposed on Iran so far have not been effective. He said Iranian President Mahmoud Ahmadinejad’s tour of centrifuges at a Tehran research reactor yesterday was proof that sanctions haven’t hurt Iran’s efforts to develop nuclear capabilities.

“If anyone needed a reminder that sanctions so far have not stopped Iran’s nuclear program, it was the guided tour by Iran’s president,” Netanyahu said. “I hope that sanctions work but so far they haven’t worked.”

Israeli leaders have treated relations with Cyprus carefully for years out of concern it could harm Israel’s military alliance with Turkey. The growing antipathy of Turkish Prime Minister Recep Tayyip Erdogan as well as the recent gas discoveries have led Netanyahu to cultivate ties with Cyprus, said Emanuel Gutmann, an emeritus professor of political science at Hebrew University in Jerusalem.

“It really wasn’t important enough for us and there were good reasons not to offend Turkey,” Gutmann, who has studied Cyprus since the 1940s, said in a phone interview. “Now everything has changed.”

Traded Barbs

The visit comes as Turkey and Cyprus trade barbs over drilling rights. Cyprus on Feb. 13 started a tender for oil and gas licenses for 12 blocks in its exclusive economic zone. Turkey says some of the areas are within Turkish territory and called the move “irresponsible and provocative.” Turkey “will take all necessary measures to protect its rights and interests,” the Turkish Foreign Ministry said in a statement last night.

Christofias condemned Turkey’s “provocative and aggressive stance.” He called on “the international community and especially the European Union to send a strong message to Turkey that it must stop violating and start respecting international law.” Netanyahu’s trip follows the Cypriot leader’s visit to Israel in March and Israeli President Shimon Peres’s tour of Cyprus in November.

Gas Findings

Cyprus has been split since 1974 when Turkey invaded the island in response to a coup by supporters of union with Greece. The European Union, which only recognizes the Greek Cypriot-run Republic of Cyprus, has called on Turkey to recognize Cyprus and help resolve the ethnic division on the island.

Noble Energy, which holds the license to explore and exploit gas in Block 12 of the island’s offshore territory, said on Dec. 28 that it discovered as much as 8 trillion cubic feet of gas off the island’s southern coast, Cyprus’s first discovery. Israel’s Leviathan field may hold as much as 20 trillion cubic feet of gas, Noble said in a Dec. 19 statement. The U.S. Geological Survey estimates that the Levant Basin, a triangular slice of the Mediterranean lying between Cyprus and Israel, may hold 122 trillion cubic feet of gas. Noble Energy discovered the Tamar field in 2009 and the Leviathan field in 2010, both off the coast of Israel.

Lebanon has asked the United Nations to adopt measures to prevent a conflict with Israel over energy exploration in areas that may fall within Lebanese territorial waters. Lebanon, which signed an agreement with Cyprus demarcating their respective offshore territories in January 2007, has failed so far to ratify it.

Lebanon’s militant group Hezbollah, which fought a war with Israel in 2006, has repeatedly pledged to protect the country’s offshore resources. Erdogan sent fighter jets and frigates to escort a Turkish seismic research ship planning east Mediterranean exploration last year.