Exxon, Qatar Co. Sign Cyprus Hydrocarbon Deal

US giant ExxonMobil with Qatar Petroleum on Wednesday signed a license to explore for oil and gas off the coast of Cyprus, and they expect to start drilling next year.

The venture was selected as part of the island's third licensing round to explore block 10, AFP reported.

Cyprus Energy Minister George Lakkotrypis described as "immense" the firms' presence in his country's exclusive economic zone (EEZ) and, for the first time, in the eastern Mediterranean.

"One of our primary goals during the third licensing round was to advance the exploration of our EEZ" aimed at discovering hydrocarbon reserves, he said at the signing ceremony. "This is precisely what we have achieved."

The minister said a total of 12 exploration wells would be drilled in the newly licensed blocks: 6, 8 and 10. Cyprus would receive a total of €103.5 million ($110.5 million) in signature bonuses from the contracts, said Lakkotrypis.

ExxonMobil and Qatar Petroleum said they had begun planning for drilling operations and intend to drill a first exploration well in 2018.

"We look forward to working with the government of Cyprus to evaluate and realize the country's hydrocarbon potential," said Andrew Swiger, senior vice president of ExxonMobil Corporation.

The blocks on offer are close to where ENI made a huge find in Egypt's offshore "Zohr" field that could hold 850 billion cubic meters of gas. The field sits adjacent to a Cyprus block licensed to Total.

The record Zohr find has raised hopes that there is more untapped wealth to be found off Cyprus.

US firm Noble Energy made the first find off the island's southeast coast in 2011 in the Aphrodite field (block 12), which is estimated to contain around 127.4 billion cubic meters of gas.

Cyprus needs to find more gas reserves to make a planned onshore terminal financially viable as it seeks to become a regional energy player.

It had planned to build a liquefied natural gas plant that would allow exports by ship to Asia and Europe, but the reserves confirmed so far are insufficient to make that feasible.

Cyprus and energy-starved Egypt are looking into the possibility of transferring gas from the Aphrodite field to Egypt via an undersea pipeline. Cyprus hopes to begin exporting gas, and maybe oil, by 2022.