Cyprus Mail

Cyprus reaches deal with Noble on modifying gas contract – reports

The government is said to have clinched a deal with the Aphrodite gas field stakeholders to modify the production sharing contract, with energy minister Giorgos Lakkotrypis expected to brief political parties next week.

Daily Politis reports that the government has reached an agreement revising the production sharing contract (PSC) with Noble Energy and its joint venture partners, Delek Group and Shell.

The key revision in the PSC will result in redistribution of profit, increasing the share of the joint venture when oil prices are low, but conversely, when global oil prices rise, Cyprus’ share will increase.

The government had pledged to keep the parties in the loop about the talks. The following week the energy minister will be meeting with representatives of the parties to gauge their reaction to the revised PSC.

Assuming most parties are on board with the modified deal, it would give the government the green light to proceed with signatures.

The government also has in its hands the companies’ plan to develop and monetise Aphrodite. It’s understood this will involve piping the gas to an LNG facility in Idku, Egypt.

The only political party that is opposed to this option is Akel, insisting that the Aphrodite gas be set aside and used for a future LNG plant in Cyprus.

The government has dismissed this, arguing that an LNG facility is untenable at the moment as it would require anywhere from 10 to 15 trillion cubic feet (tcf) of gas to be viable.

It also says that delaying an export deal with Egypt might close the current window of opportunity to develop Aphrodite.

According to energy analyst Charles Ellinas, the combined recoverable gas resources offshore Cyprus, with a 90 per cent probability, are: Aphrodite 3.1 tcf, Glafcos 4 tcf, and Calypso 3 tcf.

Also next week the energy minister will be briefing parties on negotiations to grant ENI and Total the joint concession to explore offshore block 7.

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