WHEN Noble Energy discovered natural gas deposits in the Aphrodite field at the end of 2011, Cyprus celebrated because the impression created was that it would not be long before we would enjoy the financial benefits.
When a few months later representatives of the IMF, European Commission and the ECB, the Troika, arrived in Cyprus with proposals for an assistance programme that would prop up the struggling banking sector and cash-strapped state, politicians insisted there was no need for a bailout because we could use our gas reserves to cover our financial needs. One party leader went as far as to propose we pre-sell the Aphrodite gas to raise the funds needed at the time.
It was another case of clueless politicians telling people what they wanted to hear and offering them a supposed no-pain solution to the very difficult economic problems the country was facing. Not only were there no buyers but anyone with a basic knowledge of how the gas and oil industry works would have known that it takes years before a hydrocarbon discovery is monetised because countless factors are at play, the most important being finding a buyer.
Comparisons with Egypt, which brought the huge discovery in the Zohr gas field on line 30 months after the discovery, do not apply because Egypt not only had large energy needs but it also had the infrastructure to utilise the plant, including two liquefaction plants which are now in operation. Cyprus has no infrastructure and the Aphrodite find was tiny compared to Zohr. Egypt does not have an aggressive neighbour disputing its right to exploits its gas either.
It was still quite surprising to hear energy minister Giorgos Lakkotrypis saying on Tuesday, after a meeting at the presidential palace with Shell executives, that gas would start being extracted from Aphrodite in 2025, according to the Noble-Delek-Shell time-frame. That would be 14 years after the discovery and there would also have to be confirmatory drilling in the meantime. For now, the government will have to approve the new development and production plan that will be submitted by the three companies.
This should put into perspective the government’s claims that Cyprus would become a major energy player in the region. There is no chance of this happening any time soon and perhaps the latest announcements will also put to rest the rhetoric about the EastMed pipeline. According to Lakkotrypis, the natural gas from Aphrodite is likely to end up at Egypt’s Idku liquefaction plant, in which Shell has an interest. Our strategic plans are subject to the oil companies planning and interests.