Developments and Prospects of Oil & Gas Exploration in the Eastern Mediterranean Region

and How these Translate to Employment Opportunities Training and

Education Needs

DR. CHARLES ELLINASExecutive President

Frederick University, 19 September 2013

Cyprus Offshore ExplorationReview

Cyprus has so far leased 6 Blocks and progress is as follows:• Noble Energy is conducting a second appraisal drilling in Block 12. The company

will announce the revised estimates volume by October.

• ENI/KOGAS have Blocks 2, 3 and 9 and are about to start their seismic surveyprogramme, with exploration drilling scheduled to start second half of 2014.

• Total has Blocks 10 and 11, with potential both for oil and gas. They have justcomplete their seismic survey programme, with exploration drilling scheduledin 2015.

Key point: the Government signed the LNG MoU with Noble, Delek/Avner.Negotiations are in progress for the full LNG Project. Agreement, scheduled to becompleted by December 2013.

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Introduction 

A large number of workers will be needed which may peak to 7,500 during theconstruction of the LNG plant at Vasiliko with about 700 jobs to be created duringthe operation phase. Note: for every local job created during construction, three ormore other local jobs will be also created for external support, secure and supplies.

Government, Oil & Gas industry and academia should provide the necessary trainingto professionals that this new industry demands to function efficiently. Emphasisshould be given to training for lower skills jobs and technicians needed forconstruction.

Education is the driving force for the development of the oil & gas industry. Cyprusneeds to invest to education if it is to become a strong energy center in EasternMediterranean.

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LNG Plant at Vasiliko

• The Vasiliko Energy Centre has already been allocated, the required land, by theGovernment for the development of the LNG plant and it is available andsufficient initially for 3 trains.

• Located in the Zygi Municipality in the Southern part of Larnaca District.

• Is a thinly populated area (88 inhabitants/km2) and because it is an existingindustrial area has already most of the required infrastructure.

• Some very sensitive plants are also placed there, such as a Power plant, a Navalbase, the Petrolina and VTTI Storage tank farms. The Zygi Police Station, theNational Guard and some Special Intelligence police units are responsible for thesecurity of the area.

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Possible Layout of Cyprus LNG Plant in Vasilikos -Onshore facility to liquefy gas for export

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Pre-FEED:Τechnip have just completed the Select Phase development• Concept selection studies• Collection of site specific

data for FEED• Permitting and construction

execution plans• Technical and commercial

FEED RFP bid package• FEED and EPC project

schedules• Cost estimate• One and two train optionsA minimum of 6 tcf is needed to make the LNG Plant viable

Development of Aphrodite and LNG Plant

The key stages in the development of the Aphrodite gas field and LNG Plant are asfollows:

• Appraisal drilling, as mentioned earlier, has already started, and by Q4 weshould be able to confirm gas volumes. However, if a second appraisal isneeded assessment of commerciality may have to await until well into 2014.

• As a result The Final Investment Decision (FID) for train 1 may be delayed until2016.

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Development of Aphrodite and LNG Plant

• We hope to be able to start construction of the offshore facilities, subseapipeline and the LNG Plant at Vasiliko in 2016. This is achievable if allpreparation is carried out as planned and will provide good employmentopportunities for Cypriots.

• Delivery of natural gas for the local market will then be expected by the end of2019/2020.

• And by the end of 2020/early 2021 the LNG Plant is expected to be operational,starting LNG exports to the Far East Europe and other parts of the world.

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Project Development Stages 

1 MAIN PROJECT MILESTONES 2 OWNERS ACTIVITIES: IN PARALLEL WITH TRANSITION TO FEED PHASE3 TRANSITION  TO FEED  PHASE4 FEED PHASE5 EPC PHASE6 DETAILED ENGINEERING7 PROCUREMENT8 CONSTRUCTION – TRAIN 1 & ASSOCIATED FACILITIES9 Site Preparation T1 & Ass. Fac., Piling T110 Civil Works – Train 1 & Ass. Facilities11 Piping Works – Train 1 & Ass. Facilities 12 Mechanical Erection – Train 1 & Ass. Facilities 13 E & I Works – Train 1 & Ass. Facilities14 Painting & Insulation – Train 1 Ass. Fac.15 LNG Storage Tanks (2 x 180,000m3 Full Containment)16 LNG Jetty, Loading Platf. (2 Berths) & Flare17 Precomm./Comm/ Start‐up 18 FIRST LNG EXPORTS FROM TRAIN 1 

How does Oil & Gas Industry Works

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UPSTREAM DOWNSTREAM MIDSTREAM

Searching for potential natural 

gas fields

Transportation by pipelines and 

storage 

Making it useful for consumers  

List of required skills  

• Bulldozer Operators                                                       • Back‐hoe Operators or Excavators• Front‐end Loader or Power Shovel Operators• Grader Operators• Heavy Haul Truckers• Shuttering Joiners • Steel Rebar Fixer• Concrete worker• Civil Construction Engineering Technologists• Materials/Geotechnical Technologists• Drafting/CADD/3D Modeling Technologists• Survey Technologists• Crane Operator

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List of required skills

• Heavy‐Duty Equipment Mechanics or Technicians• Industrial Electricians• Industrial Mechanics/Millwrights• Insulators• Industrial Painters• Steamfitters and Pipefitters• Welders• Electrical Project Technologists• Control Systems/Programmable Logic Control (PLC) Programmer• Mechanical Technicians• Health, Safety and Environment (HSE) Advisors/Coordinators• Medics/Occupation Health Nurses• Emergency Response Planner

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List of required skills

• Facility Equipment and Operating Unit Maintenance• Project Engineers• Electrical and Instrumentation Specialist• Quality Control Inspector  • Occupational Health and Safety Officers• Process Safety EngineersSupport Staff• Labourers• Drivers• Cleaners• Catering Staff• Security Staff• Administrative Staff

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Example of  skills needed during Construction Phase

CONSTRUCTION PHASE 

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Construction Phases 

The LNG Plant at Vasiliko will be a complex project with major construction phases asfollows:

1. Preparation of the land area at the LNG Plant site.2. Transportation, mobilization and installation of labour camps.3. Construction of LNG Plant processing, tank storage and work areas.4. Testing and commissioning of systems and equipment.5. Construction of jetty and LNG exports facilities.

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Details of phases of LNG Plant construction 

Site Preparation 

Access roads Construction camp and temporary facilities Cleaning, leveling and excavation Electricity (including its related fuel storage) Water (including its related water storage) Concrete batching plants Settling and slab construction Construction dock

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Secondary plant facilities 

Heliport  Gas –turbine electricity generator Waterhouses and laboratory Administration building Permanent housing Staff amenities Sewerage and waste treatment facilities 

Details of phases of LNG Plant construction 

Processing modules construction and assembly

Feed gas receiving area, liquid separation, gas metering and pressure reduction

Safety systems and ground flares Gas dehydration and carbon adsorption units Refrigeration and liquefaction machinery LNG, LPC and  residual NGL storage tanks Refrigerant storage  Ship loading pumps and piping

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Marine Facilities  Jetty, platforms, trestle, tanker berth Piled concrete breakwater protecting shore Loading arms, unity dock Tug boat berths 

Construction Phase NeedsMaterials / Supplies Construction ServicesAggregate Earthworks Surveying / Design Services

Cement Drainage Scaffolding

Armor Rock Roads Cleaning

Welding Consumables Concrete Waste Disposal

Industrial Gases Piling Environmental Services

Office Supplies Reclamation Public Relations

Lumber Plant buildings Equipment Rental

Fuels and Lubricants Marine Construction Housing

Construction ConsumablesHeavy – Duty Equipment Mechanics or Technicians

Transportation

Electricians Catering / Laundry

Mechanisms/Millwrights Telecommunications

Insulator Security

Steamfitters and Pipefitters Vehicle Maintenance

Welders Import/Export

Control Systems/Instrumentation

Medical

Mechanical Technicians

OPERATIONAL PHASE  

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Operational Phase 

Most of these jobs require very high skill levels as they involve operating andmaintaining advanced technological equipment.

Jobs that will require less skills: cleaning and simple maintenance tasks, security,catering and secretarial services (could easily be filled by locals)

The operator of the LNG Plant must be required to maximize employment of locallabour. This can be promoted through different methods: a) the governmentauthorities must develop national employments policies b) award the LNG Plant tobe developed and be run by companies who are genuinely concerned about localcontent. KRETYK must have a leading role in this.

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Departments needed for the operation of LNG Project  

• Office of the Managing Director • Health, Environmental and Safety• LNG Project Management Team• Operations• Maintenance• Engineering• Financial• Human Resources• Commercial• Legal• Government Relations• Community Relations• Logistics/IT

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Operational Team 

Management Team                                                          Support Roles 

Project Manager 

Construction Manager 

Commercial Manager 

Engineers

Environmental, Quality, Safety Officers

Distribution and production managers 

Science technicians 

Industrial Relations 

Human Resources 

Procurement 

Planners and  Schedulers 

Administrative personnel 

Clerical 

Superintendent

Machine operators

Technicians and Trade workers 

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Current situation of local workforce 

• Unemployment is expected to increase significantly over the next few years.

• There will be difficulties in filling positions in the LNG project due to the fact thatthere are no relevant LNG oil & gas industry skills, experience and knowledgelocally.

• There is a need for an effective education and training programme to train locallabour for the specific requirements of the LNG Plant project. Even then, mostjobs will go to skilled foreign workers, ie with more than 10 years in the sector.

• We must concentrate on preparing locals for unskilled, semi‐skilled and skilledpositions.

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WORKFORCE TRAINING STRATEGY 

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We need a Workforce and Training Strategy

Cyprus must develop a Workforce and Training Strategy: This describes the Project’sapproach to ensure cooperative strategies are in place to meet the Project’sworkforce demands. The Strategy adopts a long range outlook and targets localstudents and existing and potential employees.

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This should be supported by:

• Social Impact Management Plan for the LNG Facility

• Stakeholder and Community Engagement Plan

• Project Training Plan

• LNG Project Employee Relations Management Plan 

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Workforce and Training objectives

To ensure an adequate and timely supply of labour to the Vasiliko LNG Project by:

• Maximizing employment opportunities for locals to meet Project needs.

• Developing and increasing the available pool of skilled labour.

To seek to address local workforce and training‐related concerns by:

• Increasing employment, retention and career development for local people.

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Vasiliko LNG Approach

Vasiliko LNG’s approach to developing and delivering the Workforce and TrainingStrategy should be to collaborate with relevant education establishments, industry,government and community stakeholders in order to support a targeted andcoordinated approach to workforce and training‐related issues. Eventually thisshould be done in collaboration with the main Contractor and in accordance with theEngineering Procurement and Construction (EPC) agreement for the Project as itrelates to labour procurement.

The challenge is to build local workforce through training and developmentinitiatives of local trades and professions that are currently not directly related to theLNG industry.

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Local Education and Training Program

Should aim to increase the profile of the Gas and LNG Industry as a careeropportunity through the following:

• Partnering in education establishments based traineeship and apprenticeshipprograms.

• Supporting industry specific projects in educational establishments.• Participating in education seminars and workshops.• Providing industry familiarization to educators.• Scholarship programs and professional pathways.

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Workforce Development

Vasiliko LNG Project recognises the importance of building the local workforce.The Workforce Development Plant aims to create local jobs and train people intechnical and professional skills that are needed during the construction phase of theProject and future employment opportunities during the operation phase of theProject.

At peak almost 7,500 workers will be employed on Project activities. We hope to fill25% of these positions by locals. In addition, for every job on the project three ormore will be employed in support roles and in providing services and supplies to theproject.

In total we hope to create 10,000 jobs through this development. In addition weshould train locals who will be responsible for operating and maintaining the LNGPlant when production commences in 2020/2021.

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Workforce Development Plan 

• We need a LNG Workforce Development Plan to advise the industry as well as theGovernment of the skill requirements and numbers of workers required to betrained.

• The maximize the benefits from this opportunity we need to form a Gas and LNGSkills Taskforce.

• The Taskforce should work with Government and other key stakeholders toensure the availability of a competent and sustainable workforce to support thecurrent and future development of the LNG Industry.

• The Taskforce should undertake strategic workforce development planning toprepare for the considerable increase in skills demand over the next ten years.

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Workforce Development Plan 

• This should include assistant to and re‐orientation of existing unemployedgraduates who would like to follow up a career in the Oil & Gas sector.

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Prepare students to work in the oil and gas industry  

• Public and private universities should strengthen and upgrade their relatedcourses, to meet the industry's expectations. Early preparation is crucial to beready for construction in 2016.

• Education establishments should specifically design programs to prepare studentsto work in the oil & gas industry. Example: courses should require students to doan internship abroad to gain field experience. Companies will be looking forpeople with relevant experience. They will provide additional training where theyneeded to be more specialized.

• Universities should regularly ask industry experts for their input to ensuregraduates are meeting industry needs.

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Prepare students to work in the oil and gas industry  

• Oil and gas industries should demonstrate their support for training andeducation by providing financial help with facilities, equipment and scholarships.Also they could provide paid internships for selected students during summer.

• The Cyprus Productivity Centre as a training and productivity center could offerpre‐employment training to help and prepare students that are looking to breakinto oil and gas industry. It could provide students knowledge and hand‐ontraining to start working in LNG Project specific areas.

Our students are our most important asset and education establishments shouldprovide the best education and the right guidelines.

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Strategies to build  a competent workforce 

• Attract people to the industry.

• Develop right skills for the industry. 

• Develop the right systems and procedures.

• Establish a sustainable model.

• Establish a LNG Career Advisory Center.• There is enough time between now and LNG Plant operation, for people to be 

educated and trained, to gain the required skills and experience. Companies and government should provide all the necessary support.

• Training should be provided by the companies operating the plant.

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Benefits

•Creation of long‐term sustainable employment opportunities.

• Improving schools and universities on technical matters.

• New skills will be developed with new opportunities for future generations.

•The construction and operation of an LNG plant can provide the impetus and start‐up funding for small local businesses of various kinds, as subcontractors for goods orservices to the LNG project and late to LNG Plant.

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Conclusions

• Jobs in the Oil & Gas industry will depend very much on the training policies weimplement now. Funds should be increased in technical education and training,and local educational institutions should include relevant subjects in theircurricula, a start has already been made.

• The expertise of contractors should be used not just to construct and operate thefacility but also to train local workers and this will be made part of therequirements for winning the contract to build and operate the LNG Plant atVasilikos.

• We have a lot to achieve in a short time but we owe it to the people of Cyprus. Allshould benefit from this exciting opportunity.

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