Egypt homes in on Cyprus’s Aphrodite gas find
Licence blocks offshore Cyprus.
Egypt is pinning its hopes on Cyprus and its large offshore gas reserves, following a second high-level state visit by the Egyptian premier to the island state.
Although the flying visit on Tuesday by President Abdel Fattah el-Sisi yielded no new political commitments on energy, Egypt’s Ministry of Petroleum told Interfax the visit pushed forward the case for future gas imports from Cyprus.
"The memorandum of understanding [MOU] signed between Egypt and Cyprus… on the sidelines of the Egypt Economic Development Conference will no doubt pave the way for both countries to start the implementation potential during the coming period, along with the progress of the well from Cyprus’s Aphrodite field," said a statement from Petroleum Minister Sherif Ismail’s office. "It will no doubt boost such cooperation between Cyprus and Egypt in the gas domain."
A spokesperson for the ministry said no date had been set for signing an official deal on gas imports, and research was being carried out on whether pipeline or LNG imports would be more feasible following two MOUs signed between the countries in February and March.
While Egypt’s Ministry of Electricity and Energy has said a deal at the political level is still in the early stages, Egyptian Natural Gas Holding Co. (EGAS) is moving ahead quickly with its plans to import gas from Cyprus.
Under the MOU signed between EGAS and Cyprus Hydrocarbon Co. (CHC) during the investment conference in March, the two organisations were given a mandate to look into building a submarine pipeline. Not only has Egyptian engineering firm Enppi been chosen to conduct the technical studies, but Egypt also expects first gas deliveries to start by 2017.
EGAS Chairman Khaled Abdel Badie was quoted by local media as saying the company is in talks to import roughly 20 million cubic metres of gas per day from the Aphrodite field, off the coast of Cyprus, through a pipeline he expects will be completed within three years.
EGAS could not be reached for comment, but the Ministry of Petroleum spokesperson said the organisation has the state’s full support in driving the technical discussions forward.
Aphrodite expectations
However, this relies on production from Aphrodite starting around 2017, the year Badie wants deliveries to Egypt to begin. As Cyprus’s hydrocarbon ambitions have taken a hit this year following disappointing exploration results in other licence areas, both countries are gambling on the single field to supply gas.
Noble Energy, Aphrodite’s owner, has yet to declare whether the field is commercially viable – despite expectations voiced by Cyprus’s Energy Minister Yiorgos Lakkotrypis in March that an announcement would be forthcoming in April.
However, Noble is unlikely to make any such statement about the field for some months, a source familiar with the matter told Interfax.
Furthermore, Aphrodite was supposed to be developed alongside Israel’s Leviathan field, but an anti-monopoly case against the owners of the field, Noble and Delek Group, by Israel’s Antitrust Authority has thrown the original timeline into uncertainty. A tender to supply gas via a pipeline from Leviathan to Cyprus was postponed again last week because of this uncertainty.
The other setback to Cyprus’s regional gas ambitions is the lack of positive results from the Kogas and Eni consortium from its Block 9 exploration programme, and the temporary exit of Total after it failed to find potential drilling sites in its Block 10 and Block 11 licensed areas.
Maritime borders
While no concrete progress was made on energy matters during Sisi’s visit, the parties took time to discuss Cyprus’s territorial integrity, following Turkey’s dispatch of a seismic research ship into waters claimed by the Republic of Cyprus in November and January.
In a communiqué following the meeting with Sisi, the Cypriot government tied the future development of its gas reserves to the legal settlement of its disputed maritime borders with Turkey.
"We recognise that the discovery of important hydrocarbon reserves in the eastern Mediterranean can serve as a catalyst for regional cooperation. We stress that this cooperation would be better served through the adherence by the countries of the region to well-established principles of international law," the communiqué said.
"We emphasise the universal character of the UN Convention of the Law of the Sea, and decide to proceed expeditiously with our negotiations on the delimitation of our maritime zones, where it is not yet done."
