Cyprus’ Energy Minister Giorgos Lakkotrypis said the government concluded an agreement with US-based Noble Energy, Royal Dutch Shell and Israel’s Delek on the distribution of revenues from natural gas exploitation from the Aphrodite field in the eastern Mediterranean and the transfer of natural gas by underwater pipeline to Egypt’s Idku liquefied natural gas (LNG) terminal.

Hydrocarbons Company CEO Charles Ellinas told New Europe on 5 June that the agreement struck between Cyprus and Noble Energy and its partners, paves the way to complete gas sales to Idku. Asked if this will be the only export option for Aphrodite and whether it will affect other projects in the region, he said that depends on how much of Aphrodite’s gas Idku is prepared to buy, there may also be a small surplus that could be sold to Egypt’s domestic market.

“The likelihood of this is low. Otherwise, this sale does not directly affect any deals between Egypt and Israel. But it sets back the idea of building a liquefaction plant in Cyprus by years, as it leaves insufficient gas to do so,” he said. Ellinas explained that something like 283 to 425 billion cubic metres of gas is needed for such a project, and the combined reserves of Calypso and Glafcos (with 90% probability) are about 198 billion cubic metres.

In late February, US energy giant ExxonMobil announced it has made a natural gas discovery offshore Cyprus in the Eastern Mediterranean at the Glafcos-1 well, which is located in Block 10. The Calypso field, which was discovered by Italy’s ENI and France’s Total a year ago, is also promising.

“So, an LNG plant at Vassilikos will have to wait until more discoveries are made during the next planned drilling round in 2020-2021,” Ellinas said.

Lakkotrypis said the renegotiated deal with the companies is expected to bring in $520 million per year as state revenue, a total of approximately $9.4 billion for the agreed 18-year contract duration. The Minister said that compared to the existing contract, the new agreement will yield $ 850 million less but the agreement will enable Cyprus’ energy plans to be materialised. But Ellinas said this is a great exaggeration of estimated profits. “Basing estimates on recoverable, 90% probability, reserves and allowing for forecast gas prices in Europe over the next decade, probably in the range $6.50-$7.00/mmbtu, net profits will be a lot lower.

This is, nevertheless, Cyprus’ first gas export and places the country on the map of gas exporters. I suppose it can also be seen as Cyprus’ answer to Turkey’s threats to its gas exploration and development,” Ellinas said, expressing hope that it becomes an incentive for Turkish Cypriots to work for a solution to Cyprus’ problem, so that they can benefit from the development of the island’s hydrocarbon resources.

Lakkotrypis also said that the new agreement provides for “specific and very strict clauses” to ensure the realization of investments in the Cyprus EEZ. Ellinas explained that the new Agreement’s “specific and very strict clauses” are to ensure the rapid development of the Aphrodite gas-field. He reminded that Aphrodite was discovered in 2011 and eight years later it is still undeveloped. Cyprus is keen to realise its benefits.