Cyprus Mail
Cyprus Energy

Anastasiades, Netanyahu to discuss gas sticking point

By Angelos Anastasiou

President Nicos Anastasiades’ visit to Israel on Friday, where he will meet with Prime Minister Benjamin Netanyahu, will focus on making progress in a long-standing effort to finalise a natural gas unitisation agreement between the two countries, which has been sought since 2010, Israeli media reported.

The Aphrodite gas reserve, located in block 12 of Cyprus exclusive economic zone (EEZ), extends slightly – by 1 per cent – into the Israeli EEZ, according to reports, and although Israel has no interest in exploiting its stake as it is financially unviable, a unitisation agreement is required to delineate the reserve’s monetisation terms.

According to Israeli online portal Globes, Israel’s view is that the agreement can be finalised when political obstacles to full exploitation of the region’s natural reserves have been overcome, with Cyprus at the epicentre of the strategy to transport gas to Turkey, and from there to Europe.

“The unitisation agreement between Israel and Cyprus will be signed if the internal political dispute in Cyprus is solved, and if gas from the countries can be exported to Turkey,” Institute for National Security Studies senior fellow and former Israeli ambassador to Jordan and the European Union Dr Oded Eran was quoted as saying by Globes.

“The problem with the Aphrodite reservoir is not only the lack of a unitisation agreement with Israel, but that the quantities of gas in it do not justify the investment required to develop it. Therefore, if Israel and Cyprus manage to build joint infrastructure for exporting gas from the two reservoirs, Leviathan and Aphrodite, there will be a better chance of an agreement being signed by the two countries.”

According to Eran, the discovery of a massive amount of natural gas in Egypt’s Zohr field has “changed everything”, as the country – a former candidate to buy Israeli and Cypriot gas – will be self-sufficient, and therefore “Turkey is the address now”.

“The Turkish economy consumes 48 BCM of gas, and its consumption will double over the next 20 years,” he noted.

But a pipeline transporting Israeli gas to Turkey must pass through Cyprus’ EEZ, and this is where the issue is stuck. Barring a settlement of the Cyprus problem, it is unlikely that Cyprus would even seriously consider such a project.

“An agreement in Cyprus facilitates the possibility of combining the gas the Egyptians, the Palestinians, and the Lebanese, as well as Cypriots and Israelis, have for export, and become, collectively, a significant factor,” Eran told the Cyprus Mail.

Meanwhile, the issue of implications – and complications – that Cyprus could face in exploiting its Aphrodite reservoir, in the absence of a unitisation agreement with Israel, was also addressed by Eran.

“A state co-owning a field may try and go it alone, but it is unusual between two states which have – or are negotiating – a unitisation agreement, and especially in the case of Cyprus and Israel, which maintain friendly relations,” he said.

“But if they do not reach agreement on Aphrodite it may make potential investors, operators, etc, reluctant to get into this field. With so many alternatives elsewhere, why would they need this trouble?”

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