The government and Chevron have agreed on the terms for developing the ‘Aphrodite’ gas field in block 12 of Cyprus’ exclusive economic zone (EEZ), the energy ministry announced on Friday.

Negotiations have been ongoing between the government and the company, which is managing the exploitation of ‘Aphrodite’, for the past few months after the government initially rejected proposed amendments submitted by the company.

The agreement has been achieved on the deadline proposed by the energy ministry in the last round of negotiations.

“Therefore, with the consensus now reached, the parties are intensifying discussions in the coming weeks, based on the agreed development and production plan, for the mutually beneficial exploitation of natural gas reserves in ‘Aphrodite,’” the ministry said in an announcement.

Although details about the agreement were not publicised by the ministry or the company, it emerged that the two sides had agreed to the Floating Production Unit (FPU), which the government had been pushing to be created.

Speaking to CyBC, Energy Minister George Papanastasiou said: “A win-win situation has been achieved.” He added that it is a matter of time until the final decisions are made for exploiting the gas in Aphrodite, but that could take a few days or maybe weeks until the decisions are made.

“The goal remains to have natural gas from Aphrodite by the end of 2027,” he said.

The political party Depa also welcomed the agreement between the government and the company.

“The acceptance, on behalf of the American company, of the use of the floating natural gas production unit (FPU) for the needs of extraction and exploitation of the field, as provided for in the 2019 agreement, essentially paves the way for our country to acquire its energy infrastructure,” the party said, seemingly confirming that the main sticking point between the government and energy giant.

They added that they laud the agreement, as it shows that energy companies remain committed to Cyprus’ energy program, “offering the necessary techno-economic depth and geopolitical displacement.”

The party also called for the parties to move immediately to implement the agreement to bring significant economic benefits to the country.

Earlier this week, Papanastasiou had said that he remained optimistic a deal could be reached in the back-and-forth negotiations that had been going on since August.

He said the exchange of letters between the two parties is only a part of the negotiations process.

“Several deliberations have been held, and others are taking place as well, to reach a commonly acceptable solution,” he added.

In May, the joint venture submitted a revised development plan for the gas field. The Cypriot government rejected the amendments at the end of August, with the contract providing for 30 days of negotiations to resolve the dispute. The negotiation period was extended for another 30 days with a deadline on November 5, which was then pushed back again.

The main sticking point between the government and the companies had concerned the construction of the FPU. Chevron has proposed the FPU be scrapped from the plans as the company wanted to connect the field to liquefaction infrastructure in Egypt via a subsea pipeline.

It was understood the energy giant would have saved approximately €1 billion by not building an FPU. By contrast, having an FPU would allow for greater gas recovery, thus maximising revenue for the Republic of Cyprus.

Nicosia considered that the presence of an FPU would extend the life cycle of the field and optimise production, while its absence would mean lower recovery of quantities and consequently less revenue. Moreover, it viewed the absence of the FPU as detracting from the flexibility needed to utilise the gas.

The joint venture also proposed building three production wells, instead of five as stipulated in the development plan agreed in 2019.

Discovered in 2011, the Aphrodite field holds an estimated 4.5 trillion cubic feet of recoverable gas. Chevron is the operator and a 35 per cent partner in the field, along with Shell (35 per cent) and Israeli firm NewMed Energy (30 per cent).