Agreement on Cyprus-Israel gas field expected next month

Cyprus and Israel are “very close” to an interstate agreement regarding the Aphrodite natural gas reservoir, the energy minister reiterated on Monday.

Michalis Damianou told CyBC that an Israeli government delegation was expected to visit the island over the next fortnight.

The two sides are currently in talks to close the pending matters, paving the way for the signing of an agreement.

The minister said he is confident the talks could wrap up by the end of March.

The talks and the prospective deal concern how to manage the small part of the Aphrodite gas field that extends into Israel’s Ishai block and concerns quantities of natural gas that may be located within Israeli economic waters.

The process essentially lays out a mechanism for compensating the owners on the Israeli side.

Talks between Cyprus and Israel have been on-and-off for years.

The Aphrodite reservoir holds an estimated 3.5 trillion cubic feet of recoverable gas.

Regarding the commercialisation of Aphrodite, Damianou said that once the unitisation deal with Israel is in place, Chevron – operators of the field – have a timetable for making use of the gas by 2030.

The gas in Aphrodite was discovered in late 2011.

According to the minister, the first gas from Cyprus’ exclusive economic zone to get monetised will be that in the reservoir dubbed Kronos, in Block 6.

This is expected to happen around the end of 2027, Damianou added. The gas would be piped to Egypt via existing installations in the nearby Zohr field. Once ashore in Egypt, it would be liquefied for re-export to European markets.

The minister also gave an updated status report on other energy-related projects. On the Great Sea Interconnector – a subsea cable linking the electricity grids of Cyprus and Greece – he said that a new cost-benefit analysis has yet to get underway.

The company carrying out the study would be chosen jointly by the two governments.

Damianou also confirmed that Cyprus has yet to pay the €25 million toward the GSI for the 2025 fiscal year. The €25 million is for the project promoter – Greece’s independent power transmission system operator.

Switching to the LNG terminal at Vasiliko, the minister said talks with the United Arab Emirates for their possible involvement are still at an early stage.

On the LNG terminal, news outlet Stockwatch said a new tender could be launched by June.

The project was left half-finished and in limbo when the Chinese-led contractor walked out in mid-2024.

Citing sources, Stockwatch reported that the project might still be salvageable if a new tender is launched in June. It would then take three to four months to assess the bids and, if a contract is awarded, another 18 months to complete the works.

For the time being, the government is assessing the ‘gap analysis’ furnished by Technip, the new project manager.

The aim is for Etyfa – the state-owned natural gas infrastructure company, the owners of the project – to complete the evaluation “within the next few weeks”.

Etyfa is said to be of two minds about how to proceed. One option would be to adopt Technip’s suggestion for redesigning the project from scratch; the other would be to work around the current design and ‘fill out’ the various half-completed works.

The LNG project’s cost so far stands at about €315 million.

The contract for the project had been awarded to CMC (CPP-Metron Consortium Ltd) in December 2019. In July 2024 CMC unilaterally broke the contract, citing irreconcilable differences with the Cypriot side.