October 22nd, 2015
Despite rumours that tensions were rising between Israel and Cyprus over the ownership of the 4.54 Tcf Aphrodite field, discovered by Noble Energy in 2011 and located in Block 12 of Cyprus´Exclusive Economic Zone, Cyprus’ Minister of Energy, Commerce, Industry and Tourism maintains that the relationship between the two countries is as amiable as ever and heading towards closer energy ties. Lakkotrypis is expected to meet his Israeli counterpart Dr Yuval Steinitz in Nicosia in November to discuss the Aphrodite reservoir and decide on the next steps that will lead to the signing of a unitization agreement. Israeli officials have been claiming that the Aphrodite field extends into Israeli waters. Since the signing of a maritime border agreement in 2010, Cyprus and Israel have not been able to finalise a unitization agreement that would ensure the rights of adjacent sovereign states in the event of a shared cross-border reservoir.
Cyprus and Israel have been eyeing the regional market as a potential destination for their newly discovered offshore riches. Cyprus has moved from an original plan to build an onshore LNG terminal to a more realistic pipeline strategy given the modest quantities of natural gas discovered to date under its seabed. A collaboration with its Israeli neighbour is a possible scenario. Both may be exporting gas via an undersea pipeline to Egypt to supply the domestic market and access far-reaching destinations via Egypt’s underused export terminals at Idku and Damietta operated respectively by BG and Union Gas Fenosa.
ENI’s Zohr discovery offshore Egypt in late August has however brought important question marks to the table. The field discovered by the Italian company in the Shorouk Block of Egypt’s maritime zone, in very close vicinity to Cyprus' maritime zone, is estimated to hold up to 30 Tcf of natural gas, enough to put an end to Egypt's severe energy crisis and ensure the country’s re-entry into the export market. Egyptian officials maintain however that Egypt will be needing gas from Israel and Cyprus as an interim solution before the Zohr field comes online in 2020.
A collaboration in the field of energy between Cyprus and Israel will no doubt strengthen the two countries positioning as emerging natural gas producers in the region and beyond. A meeting between Lakkotrypis and Steinitz will set the tone of such a potential partnership starting with the pending unitization agreement and moving on to joint export infrastructures that will optimize the two Eastern Mediterranean countries’ respective energy potentials.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut.
