World Affairs Council - North County Chapter January 5, 2012

By David Edick Jr.

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Technically recoverable oil & gas reserves

122tcf gross mean gross volume GAS

(gross range 50bcf to 227tcf)

1.7 billion barrels mean gross volume OIL

(gross range 483m – 3.758b)

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Marine-1 and Marine-2: 2000(Gaza), 1.4tcf, 40bcm (BritishGas, Lebanese,PalestinianFund)

Mari-B: 2000, 1.2tcf (Noble 47%), 800ft, 2004 Tamar: Feb 2009, 8.4tcf (Noble 36%) 5,505ft ◦ Israel Gas Demand 350mcf/day; Tamar target 1bcf ◦ Will cover domestic demand for 15-20 years

Dalit: Mar 2009, 500bcf/14bcm (Noble 36%) Leviathan: Dec 2010, 16tcf/450bcm, (Noble

39.6) ◦ Export LNG from Israel or Floating LNG – or ◦ LNG via Cyprus

Aphrodite (Cyprus): Dec 2011

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The initial Tamar well cost $140 million and was drilled in 5,500 feet of water some 57 miles from shore to a depth of 16,076 feet.

The Tamar discovery tested 30 million cubic feet of gas a day, constrained by facilities. Production wells will each be capable of making 150 million a day.

Premium-quality gas, nearly pure methane

Leviathan may extend into Lebanese waters

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Noble Energy, Inc. (Houston, USA)(NYSE) ◦ Delek subsidiary holds 4%

Delek Group (Yitzhak Tshuva)…includes ◦ Delek Drilling LP ◦ Avner Oil Exploration LP

Yam Thetis (joint venture…Mari-B field) ◦ Noble (47.1%) ◦ Delek Drilling LP (25.5%) ◦ Avner Oil (23%) ◦ Delek Group…indirect holding (4.4%)

Aphrodite (Cyprus): Noble 70%, Delek Drilling LP 15%, Avner Oil Exp LP 15%

Dec 6, 2011: Cyprus OK’s Nobel option sell 30% Aphrodite to Delek Drilling LP & Avner Oil Exp LP

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Cyprus awards Block 12 lease to Noble ◦ Later found to be on trend w Tamar & Leviathan

Drilling Cyprus A-1 well began Sept. 19, 2011

Drilled to depth of 19,225ft in 5,540ft water

Discovery announced Dec 28, 2011: 3-9tcf; median 7tcf (200bcm)

Could meet Cyprus gas demand for 210yrs

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Seismic acquisition in Cypriot and Lebanese water is being carried out by Norway’s Petroleum Geo‐ Services (PGS). A paper prepared by PGS staff and posted on the internet in May 2009 said high‐quality 3D data show “several attractive large sub‐salt four‐way dip closures and new stratigraphic plays offshore Cyprus and Lebanon.” It added that “numerous DHI’s [direct hydrocarbon indicators] associated with the prospects indicate several active petroleum systems

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Turkish Republic of Northern Cyprus (TRNC) was established after the July 20,1974 invasion (following Greek Cypriot coup July 15, 1974) and is recognized only by Turkey.

The Greek Cypriot government in Nicosia has international recognition and is a member of the European Union.

Turkey, which insists the Greek Cypriots in the southern part of the island, divided since 1974, can only drill with the consent of the Turkish Cypriot minority in the north.

Turkey, once a firm ally of Israel and now a bitter adversary, sent two warships plus air force fighters to escort a Turkish seismic ship into Cypriot waters to conduct exploratory drilling in September – to defend TRNC/Turkish political position.

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Greek Cypriot President Demetris Christofias

Northern Cyprus leader Dervis Eroglu

Cyprus assumed the presidency for the Common Security and Defence Policy (CSDP) of the EU on January 1st 2012, as Denmark, the current Presidency of the European Council, does not participate in the European Defence Agency (EDA).

Cyprus takes Presidency EuroCouncil H2, 2012

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Evangelos Florakis naval base

Thirteen sailors and fire fighters died because 98 containers holding 2000tons of munitions reluctantly confiscated by the government in 2009 from a ship sailing from Iran to Syria

Blast heard 30 miles away

Vassilikos power station: ~ 50% electric power

Damage est EUR2b; upwards of 20%GDP

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Bond Downgrade related to woes in Greece

Impending crisis following power plant destruction (power shortage, generator lease costs, diesel fuel imports)

October 6, 2011: Russia loans EUR2.5b ($3.3b) at 4.5% (half market rate) for 4.5 years

President Demetris Christofias (educated in Soviet-era Moscow, fluent Russian speaker)

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Under the UN Convention on the Law of the Sea (UNCLOS), a coastal State has sovereign rights to explore and exploit, conserve and manage the natural resources in its Exclusive Economic Zone (“EEZ”). 1982,1994

Under UNCLOS Article 57, the EEZ extends a maximum of 200 nautical miles from the shore.

States must deposit charts and lists of geographical coordinates of the EEZ to the UN Secretary-General.

The closest distance between Israel and Cyprus is 140 nautical miles

Article 74 provides that States with opposite or adjacent coasts must delimit their EEZs by applying international law to achieve an equitable solution.

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162 states and the European Community have joined UNCLOS

Cyprus (1988), Greece (1995), Lebanon (1995)

Israel, Turkey, & Syria are not signatories

Lebanon & Israel: although Israel is not a party to UNCLOS, these rules are nonetheless generally considered binding on both states as customary international law.

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Turkey did not sign the UN convention on the Law of the Sea. However, in November 1986, Turkey declared an Exclusive

Economic Zone in the Black Sea and concluded an agreement with the Soviet Union concerning states with coasts opposite or adjacent to the coasts of Turkey, using the method of the median line.

Later Turkey started talks with Bulgaria and Romania on the same issue and reached an agreement with them, which was similar to the one it concluded with the Soviet Union.

Fishing Zone/EEZ with Romania (April 1986) and Ukraine (1995) Consequently, whereas Turkey has cooperated with adjacent

states in the delimitation of the Exclusive Economic Zone in the Black Sea, which is a closed or semi-closed sea as is the Mediterranean Sea,

Yet it refuses to do the same in the Mediterranean, even though it has itself created a precedent in the Black Sea.

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December 1988, Cyprus ratified the UN Convention on the Law of the Sea.

February 2003 Cyprus signed an Agreement on the Delimitation of the Exclusive Economic Zone with Egypt. (Mineral rights mentioned)

January 2007 Cyprus signed an Agreement on the Delimitation of the Exclusive Economic Zone with Lebanon (not yet ratified by Lebanese parliament).

The Agreement is based on the internationally accepted principle of the median line and in accordance with the UN Convention on the Law of the Sea.

Dec 2010, the Agreement on the Delimitation of the EEZ between Cyprus & Israel was signed -Cyprus ratified Feb ‘11

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Israel and Lebanon do not have a finalized land border - much less a maritime border.

UN Blue Line & 1923 Mandate Line

In July 2010, Lebanon deposited with the UN Secretary General, charts and a list of geographical coordinates of points defining the southern limit of Lebanon's EEZ: in other words where they see their border with Israeli as lying. The deposit also gave coordinates for their EEZ with Cyprus. www.menasborders.com

In September 2011, Turkey protested against Lebanon’s maritime treaty with Cyprus

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Lebanon is technically at war with Israel Israeli Minister of National Infrastructures Uzi Landau

had warned Beirut that Israel would use force to protect “the rule of law…and international maritime law,”.

Israel is considering a $100 million plan to buy patrol boats to protect the offshore gas fields

May ask companies developing fields to help buy The government may decide to go for Super Dvora-

class ships built by state-owned Israel Aerospace Industries and Shaldag-class vessels produced by Israel Shipyards in Haifa

Sa’ar corvettes; Dolphin submarines Current 24-hr presence of drone aircraft

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Awful economic/financial situation

Tyranny of Doctrine of Austerity

Can Greece stay in the Eurozone?

Does Greece have a future in the EU?

Greece is a member of NATO – as is Turkey, but…

What is the future of NATO in a post-Eurozone world?

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Only 15 per cent of the current account deficit is covered by non debt inflows,

Financed instead with a weight of portfolio inflows and short term borrowing

Over $200b in gross finance requirement 2012

Over $50b of 77.6b trade deficit is for energy

Erdogan colorectal cancer?

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Sept 19, 2011: Noble starts drilling Aphrodite/Block-12.

Sept 27, 2011: Turkey announces it was exploring for gas in an offshore zone where Cyprus started drilling. Seismic ship Piri Reis was escorted into position by a navy frigate and a flight of warplanes previous night.

Sept 29, 2011: 2 F-15 Israeli jets flew through the airspace of both Greek Cyprus and Turkish-controlled northern Cyprus - then ‘buzz’ the Turkish seismic ship Piri Reis. Turkey sent two F-16 jets to track the Israeli F-15s, which subsequently returned to Israel.

Sept 29, 2011: Israeli military helicopter flew over the Turkish seismic research ship the Piri Reis, exploring for gas off of Cyprus's southern coast.

Dec 23, 2011: Israel halts $140m advanced intelligence equipment sale to Turkey

Dec 24-25, 2011: Admission by former Turkish PM Mesut Yilmaz that Turkish secret agents intentionally started forest fires in Greece (islands) in the 1990s as part of state-sponsored sabotage.

Jan 3, 2012: Turkish reports of Israeli Heron drone was observed spying above the Turkish 14th Hawk B. Brigade Command in Hatay’s Kırıkhan district for 4hrs.

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