Charles Ellinas
This week’s deal with Noble, Delek and Shell divvying up the profits from the Aphrodite gas-field is not quite what it seems at first glance
The good news is that an agreement has been reached between the government and the Noble Energy, Delek and Shell joint venture (JV) on a revised Production Sharing Contract (PSC) for the development of the Aphrodite gas-field.
Based on published reports the agreed profit split is now about 57 per cent to Cyprus and 43 per cent to the JV, when the price of oil is $70/barrel – with Cyprus’ share going up when the oil price goes up and down when the oil price goes down. With long-term forecasts estimating the average oil price range to be $60-$70/barrel, there can only be a downside for Cyprus. That’s why the JV was so keen on this renegotiation.
There are also new provisions to ensure development of Aphrodite within a strict timetable, with penalties to the JV if it is not. This of course is what the JV wants too – to develop the project as soon as possible.
This week’s deal with Noble, Delek and Shell divvying up the profits from the Aphrodite gas-field is not quite what it seems at first glance
The good news is that an agreement has been reached between the government and the Noble Energy, Delek and Shell joint venture (JV) on a revised Production Sharing Contract (PSC) for the development of the Aphrodite gas-field.
Based on published reports the agreed profit split is now about 57 per cent to Cyprus and 43 per cent to the JV, when the price of oil is $70/barrel – with Cyprus’ share going up when the oil price goes up and down when the oil price goes down. With long-term forecasts estimating the average oil price range to be $60-$70/barrel, there can only be a downside for Cyprus. That’s why the JV was so keen on this renegotiation.
There are also new provisions to ensure development of Aphrodite within a strict timetable, with penalties to the JV if it is not. This of course is what the JV wants too – to develop the project as soon as possible.
