Cyprus-Israel gas field agreement edges closer

The formulation of an intergovernmental agreement between Cyprus and Israel for the management of the Aphrodite-Ishai gas field is in the final stages, Energy Minister George Papanastasiou said on Wednesday.

He was speaking at the 13th Energy Symposium in Nicosia, which was also addressed by President Nikos Christodoulides who announced interest from energy giants for more blocks within Cyprus’ exclusive economic zone (EEZ).

Earlier Papanastasiou told the audience that the text of the agreement with Israel on the Aphrodite-Ishai fields was essentially complete and the final draft with comments from the Cypriot side was sent to Tel Aviv last week.

“The goal of the two energy ministers,” he said, “is to sign the agreement by the end of the year”. The minsters thrashed out the basics of an agreement when they met in September after years of wrangling between the two governments.

Papanastasiou explained that the intergovernmental agreement under development will determine how to manage the small part of the Aphrodite field that extends into Israel’s Ishai block and concerns quantities of natural gas that may be located within the Israeli EEZ.

He said the process would essentially lay out a mechanism for compensating the owners of the Israeli side.

Last February, Chevron, Egypt and Cyprus signed a non-binding Memorandum of Understanding agreeing export of block 12 Aphrodite’s 3.5tcf gas to Egypt to be liquefied the Damietta plant.

This deal was followed by conclusion of the negotiations between Cyprus and Chevron on the development plan (FDP) for the gas field, estimated to cost $4billion. It envisages production of 800million ft3/day through four wells using a floating production unit (FPU) to export the gas to Egypt.

Papanastasiou said Aphrodite would include a floating processing unit located directly above the reservoir with the gas transported to a landfall point near Port Said and then fed as dry gas into Egypt’s pipeline network.

If everything goes to plan, gas exports could start in 2031 and Cyprus would see income from the project in 2034-2035, he said.

Papanastasiou said that there had been “very important progress” overall in the past year, which he added contributed to stability in the Eastern Mediterranean and created prospects for exporting natural gas to European markets. Some quantities could potentially also be used for domestic consumption in the future.

The “Kronos” field in block 6, the minister said, would be the first to be developed as it lies closest to Egypt’s existing Zohr field infrastructure. “It will be connected with an underwater pipeline to Egypt, where the gas would be processed onshore before being sent to Damietta for liquefaction and export as LNG,” he said.

Technical preparations for gas transport and processing were well advanced and based on current planning, the first natural gas from Kronos is expected by late 2027, “an optimistic but not unrealistic timeline”, the minister said.

“For the first time, Cypriot gas fields are progressing toward concrete agreements that make their actual development possible enabling Cyprus to finally bring its offshore resources to production.”

On the commercial front, Papanastasiou said negotiations for the sale of gas from Kronos were underway. As the selling party, Cyprus is seeking a price that ensures the project’s viability, he said.

While Cyprus currently lacks infrastructure to use natural gas directly, the minister did not rule out that future LNG cargoes from Damietta could be transported to Cyprus for regasification and domestic use, leveraging the LNG terminal under development at Vasilikos.

He also referred to the memorandum of understanding between Energean and Cyfield for potential supply of natural gas to Cyprus via a pipeline from Israeli fields. “These projects are being evaluated,” he said, adding that two proposals are currently on the table and must be assessed by the government to determine the optimal path for importing natural gas into Cyprus.

Christodoulides, in his speech said there had also been significant developments with the discovery of gas in the Pegasus field located in block 10 of the island’s EEZ.

“It is also important that we have interest from energy giants for more plots. It is something that we are discussing, and I believe that we will soon make decisions,” he said.

“In other words, we are now entering the stage of real utilisation which, among other things, also strengthens the international image of our country, attracts investments and strengthens regional cooperation.”