UPDATE 2-Noble's Cyprus gas drill at lower end of estimates

* Cyprus gas find is third largest in Levantine Basin

* Reserves gross value three times Cyprus’s GDP

* Authorities say committed to LNG terminal, want to avoid delays

* Discovery boon for financially troubled island

By Michele Kambas

NICOSIA, Oct 3 (Reuters) - A landmark natural gas well off Cyprus has produced less than anticipated, potentially delaying investment in a liquefied natural gas plant and plans for export by 2020.

Cyprus and its exploration partners, Texas-based Noble Energy, on Thursday announced an around 5 trillion cubic feet (tcf) natural gas find, lowering the initial estimate of 7 tcf made in late 2011.

One gas official said lower estimates could briefly delay plans to start work on a $6.0 billion liquefied natural gas terminal in 2016 until more wells off Cyprus are discovered, but that could be avoided with further appraisals of the prospect.

Energy Minister Yiorgos Lakkotrypis said the island was committed to seeing the LNG project through.

Even though lower than expected, the discovery was a rare glimmer of good news for Cyprus. It teetered on the brink of financial collapse in March with its one million inhabitants bracing themselves for at least two years of deep recession from an EU/IMF imposed austerity programme.

“Despite the lower quantities we announce today compared to those of 2011, the confirmed reserves affirm a particularly important reserve of natural gas,” Lakkotrypis told reporters.

He said a “very preliminary” estimate, based on reserves of 4.5 tcf in Noble’s prospect, placed its gross value at $50 billion.

Cyprus’s own GDP is about a third of that, and the find is just one among 13 offshore blocks. Six of them are under concession.

“We would be looking at a net profit for the Republic of between $12 and $18 billion over a 14 year period,” Lakkotrypis said.


Cyprus says there is much more gas waiting to be discovered. France’s Total, Italy’s ENI, and South Korea’s KoGas planning exploratory drillings in other offshore areas starting next year.

Noble is a leading partner in wells off neighbouring Israel, where there have been massive discoveries in recent years, attracting the attention of the European Union, which wants to wean itself off over-reliance on Russian gas.

Cyprus is also in talks with Israel on its neighbour using the Cypriot LNG terminal to export Israeli gas.

“The LNG project we are working on with the government remains our strategic priority in terms of commercialising the gas,” Noble country manager John Tomich told reporters.

However on its own, 5 tcf may be on the low side to get the ball rolling imminently on the terminal, Charles Ellinas, executive president of Cyprus’s natural gas company Kretyk told Reuters.

“It may be a bit too low to enable us to proceed with plans for the LNG plant as formulated so far,” he said.

If Israel decided to use Cyprus’s terminal to export its own gas. the project would remain on schedule. If not, there could be a delay of between one and two years until further Cypriot discoveries come online, Ellinas said.

“The LNG plant idea doesn’t go away, because it was made on the basis of all six blocks (under concession),” Ellinas said.

The Noble reserve is the third-largest found in the Levantine Basin, a sea area between Lebanon, Cyprus and Israel.