Israel issues deadline on Cyprus gas row

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Israel warned it would intervene if energy companies licensed to commercially exploit the bordering Aphrodite and Yishai gas fields do not resolve their dispute by March 4.

According to the Jerusalem Post, this is the warning given by Israel Energy Minister Karin Elharrar in a letter to Nammax Oil and Gas.

“Israel never gave up on its rights to the Yishai Reservoir, including the demand that the reservoir not be opened unilaterally.

“This stance has been made clear to all sides a number of times on different occasions,” Elharrar said.

Nammax, together with Israel Opportunity, holds the license to operate the Yishai gas field, which straddles Cyprus’ Aphrodite.

Israel and Cyprus have been involved in a long-running dispute over the development of the gas field.

About 10% of the Aphrodite-Yishai gas field is in Israel’s exclusive economic zone, and the rest belongs to Cyprus.

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.

It is estimated the Israeli side of Aphrodite-Yishai has 10 billion to 12 billion cubic meters of natural gas, much less than the Leviathan gas field, which has an estimated 605 bcm.

After Cyprus moved toward developing Aphrodite, former Israeli energy minister Yuval Steinitz agreed with his Cypriot counterpart last March that the companies involved would negotiate and reach an agreement within a year.

“The window of opportunity for direct negotiations between the commercial sides is close to ending,” Elharrar wrote.

“If the companies do not reach a solution by March 4, the negotiations will once again be led by the states.”

Despite past agreements by which the countries would develop the gas field together, the 2021 agreement said Israel would give up on its rights to its part of Aphrodite-Yishai and take monetary compensation instead.

A study by economist Yehoshua Hoffer for the Yishai holding group believes such a deal could net the government about NIS 5 billion (€1.36 bln) in royalties and taxes.

In 2019, 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 reached an agreement over ownership of the reserves in a border dispute with Israel’s Yishai.

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.