Cyprus rejected Chevron’s plan to develop the island’s offshore Aphrodite natural gas field, but Energy Minister George Papanastasiou is hopeful a compromise can be found.
Papanastasiou told Bloomberg that the concerned parties are now able to “initiate talks with the aim of reaching an agreement within a 30-day timeframe.”
The new negotiation period commenced on August 25.
The plan, submitted by a Chevron-led consortium of Shell and Israel’s NewMed Energy in May, aimed to connect the gas field to an existing processing and production facility in Egypt via a subsea pipeline.
Aphrodite, discovered more than a decade ago about 170 km from Limassol, holds an estimated 124 billion cubic metres of gas.
Papanastasiou told CyBC radio Monday that he was optimistic an agreement on resolving the issues that have arisen to commercially develop Aphrodite will be found.
He believes there could be a conclusion to the negotiations within the 30-day timetable.
The minister said the updated plan was rejected because it transferred financial advantages to the consortium away from the government.
He revealed that the gas infrastructure is removed under the revised plan, increasing state costs.
At the end of May, Chevron handed over an updated plan for developing the project to the government.
The plan included a change to the fundamental project concept of the approved development and production plan.
According to the updated plan, the production of natural gas from the Aphrodite reservoir would be done through the construction of a subsea pipeline and connection to existing offshore and onshore infrastructure in Egypt, without the construction of a floating production and processing facility within the area of the reservoir, which is included in the approved plan.
A letter from the government, received on August 25, threw a wrench in Chevron’s plans, as Nicosia decided not to approve the updated plan.
Furthermore, the letter of reply outlines several reasons for the government’s decision not to approve the updated plan, including the claim that this plan is expected to increase the technical and commercial complexity of the project and is not expected to produce the advantages put forward in the request.
“We cannot afford to let Chevron’s cost-cutting diminish the terms that safeguard our interests,” Papanastasiou told MEES.
He added: “Our stance remains steadfast; our commitment lies with the 2019 production-sharing contract (PSC).
“We anticipate the Aphrodite consortium to honour this agreement. Any deviation should ideally enhance the existing FDP in collaboration with us.”
The Aphrodite field is in Block 12 of Cyprus’ Exclusive Economic Zone (EEZ), where the sea depth is 1,700 meters.
The block is operated by Chevron with a 35% interest, with Shell (35%) and NewMed Energy (30%) as partners.
“The partners in the Aphrodite reservoir, with the assistance of their outside counsel, intend to consider the implications of the said decision of the government of Cyprus and prepare for the continued discussions on the matter with the representatives of the government of Cyprus,” said NewMed.