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Blow to Tshuva: Cyprus rejects Aphrodite development plan

Blow to Tshuva: Cyprus rejects Aphrodite development plan

The Cypriot government has decided not to approve the partnership’s development and production plan for the Aphrodite (Chevron 35%, Shell 35% and Delek unit NewMed Energy (TASE: NWMD) 30%, controlled by Yitzhak Tshuva) offshore gas field. Nicosia has invited the partners for further discussions in September.

The plan, which was not approved, included construction of an underwater pipeline that would connect the field in Cyprus to existing production infrastructure in Egypt. According to an assessment made by the operator Chevron, the updated development plan could have reduced the development costs compared to the original plan and even shortened the timetables for starting the production of natural gas from the field. The Cypriot government refused to accept the plan because it is expected to increase the technical and commercial complexity of the project and is not expected to bring the benefits claimed in the application.

Gas reserves in the Aphrodite field, discovered in 2011, are 129 BCM (billion cubic meters), about 20% of the gas in the Leviathan field. The field is mainly in Block 12, at the southeastern edge of Cyprus’ economic waters and spills into Israel’s economic waters, with about 10% of it in Israel where it is called the Ishai field.

In June, Israel’s Minister of Energy and Infrastructure Israel Katz met with Cyprus’s Minister of Energy, Commerce and Industry Giorgos Papanastasiou to promote an agreement on the status of the field. The Israeli partners in the Ishai field Israel Opportunity, Nammax Oil & Gas, Petroleum Services Holdings (PSH), and Eden Energy are supposed to reach an agreement between them by September which would allow the Israeli and Cypriot government to sign an agreement on sharing Aphrodite’s revenues by the end of the year.

The status of the field has left a “cloud” over the excellent relations between Jerusalem and Nicosia, when from time to time the Cypriots have tried to implement measured unilateral actions to advance the agreement. In May, the partnership began drilling A-3 in Cypriot economic waters of to clarify whether and how much can be produced. Although this is not actual production, it is an advanced stage on the way to it, despite not yet reaching an agreement with Israel.

For Aphrodite, a particularly expensive issue is to connect to a pipeline that will carry the natural gas to a treatment facility, otherwise the cost of setting up a small facility is about $2 billion.

Published by Globes, Israel business news – en.globes.co.il – on August 27, 2023.

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