By Stelios Orphanides
Government spokesman Prodromos Prodromou said that the cabinet may decide to renegotiate the revenue sharing agreement for the 4.5 trillion cubic feet (tcf) Aphrodite gas finding, the Cyprus News Agency (CNA) reported on Monday.
The cabinet, which is meeting on Tuesday at the presidential summer residence in Troodos, may decide whether the renegotiation will commence and if yes, its direction and terms, he said according to CNA.
“Decisions are about to be taken regarding demands raised by companies with which the Republic is in cooperation in Aphrodite,” the spokesman was quoted as saying. “Despite challenges or obstacles some people attempt to raise, we are now at a point that decisions of strategic importance have to be taken”.
Aphrodite lies in block 12 of Cyprus’s exclusive economic zone (EEZ) and it is Cyprus’s first gas finding, discovered in 2011. The Houston-based Noble Energy Inc. is the leader of a consortium with the participation of Israel’s Delek and Britain’s BG (British Gas), a subsidiary of Shell.
A possible decision to renegotiate the agreement with Noble Energy may come weeks before the ExxonMobil – Qatar Petroleum consortium begins drilling for gas in block 10 of Cyprus’s EEZ, which could be a potential game changer in the development of offshore hydrocarbons. Earlier this month, the government struck a preliminary agreement with Egypt that will allow Aphrodite to be linked with Egyptian liquefaction plants via pipeline, expected to be signed this autumn.
In February, Italy’s Eni announced the discovery of an up to 8 tcf gas finding in block 6. NATO-member Turkey, which opposes Cyprus’s plans to develop its hydrocarbons in the absence of a settlement of the Cyprus problem and blocked Eni’s ship from accessing its target for an exploratory drilling in block 3 six months ago, is currently in a confrontation with the US which severely hurt bilateral relations.
Energy Minister Yiorgos Lakkotrypis is expected to reveal details over the decisions that the cabinet will take, Prodromou said.
While the decline in energy prices that set off in mid-2014 has negatively affected investment in hydrocarbons, in recent months they started to recover. The price of a barrel of oil had fallen from over $100 per barrel four years ago to as low as below $40. Currently, Brent oil is traded at around $50.
Prodromou said that it emerged from a July 30 meeting of the National Council, in which President Nicos Anastasiades briefed participating party leaders “there is consensus, as it is about the interests of the country,” and not the policies of a government or specific political forces.
Cyprus’s interests should come first, Prodromou continued adding that Cypriots should approach the matter strategically in the context of the prospects of the entire Levantine basin.
He added that the Republic of Cyprus has hired foreign expert consultants in the area in order to be able to take the best possible decision.