Cyprus and Israel have agreed on how companies operating in the bordering Aphrodite and Yishai gas fields can start negotiating their commercial exploitation to end a nine-year row.
The agreed formula was announced on Tuesday in Nicosia by Cypriot Energy Minister Natasa Pilides and her Israel counterpart Yuval Steinitz.
Last year, Israel had threatened to block Aphrodite gas development over a rights dispute.
It had advised energy companies not to start work on the Aphrodite gas field off Cyprus until the two countries reach an agreement over ownership of the reserves in a border dispute with Israel’s Yishai.
Israel and Cyprus signed an agreement setting the border between their respective exclusive economic waters in 2010.
The agreement, which was designed to arrange the development of gas reservoirs straddling both countries’ territory, was never signed.
In the absence of a distribution agreement, Israel refuses to allow Cyprus to develop Aphrodite because pumping gas from it will also cause gas to be pumped from the Yishai prospect.
Pilides said the two ministers managed to make “significant progress” on Yishai and the issue of Aphrodite.
She said they have agreed on a framework according to which the companies involved in this project will have specific guidelines for resolving the issue.
Pilides said a proposed settlement agreed between the companies will need final approval from both governments.
She said the proposed formula would be sent to the companies through a joint letter.
Steinitz said his successful visit managed to make significant progress on the Aphrodite-Yishai nine-year dispute.
“Finally, after years of endless and fruitless talks and negotiations, we think we made significant progress, maybe even a breakthrough”.
The idea is for the two governments to enable the companies on each side of the demarcation line between the Exclusive Economic Zones of Cyprus and Israel to get together over the next six months and find a commercial arrangement to be approved.
“We think that there is a fair chance that commercial companies might find some regiment among themselves, and then it will be easier for the governments to consider and to approve.”
Although some details need finalising, the companies will be invited to meet, with Cyprus and Israel’s approval.
“Suddenly we see the light at the end of the tunnel, there is a fair chance, nothing is certain, but there is a good chance this might lead to a solution of this little but significant obstacle in the wonderful relations and cooperation between Cyprus and Israel on energy,” said Steinitz.
US energy giant Chevron has taken over Noble Energy for $5 bln in an all-share deal. It now has a major stake in the operating licence for Aphrodite in Cyprus‘ EEZ, along with joint venture partners Shell and Israel’s Delek.
The Aphrodite field holds an estimated 4.1 trillion cubic feet of gas. At stake is about 10% of the deposit, a fraction of the gas already discovered in Israel.
The Israeli minister said it was his first visit abroad since the pandemic calling it “another token of the very close relations between our two countries”.