Chevron asks for extension to key Aphrodite gas study (Updated)

The government on Monday confirmed having received a request by US energy giant Chevron seeking an extension to the completion of a key engineering study for the Aphrodite natural gas project.

Contacted by the Cyprus Mail, Energy Minister George Papanastasiou – away in Dubai attending the COP28 – simply confirmed receipt of the request. It was unclear whether the government had responded to Chevron in the meantime.

In a filing to the Tel Aviv stock exchange on Sunday, December 3, Israeli firm NewMed – a partner in the Aphrodite concession – said that two days earlier Chevron had asked Papanastasiou to “postpone the date for compliance with the milestone determined in the Production Sharing Contract (PSC) for commencement of the Front-End Engineering Design (Feed), in order to formulate, together with the Cypriot government, during the said extension, an optimal development plan.

“As of the date of this report [December 3],” the statement added, ” the minister’s response has not yet been received.”

Chevron had sent their letter last Friday.

Friday was the same day the government announced a deal with Chevron regarding the development plan for the gas field.

“A win-win situation has been achieved,” Papanastasiou said at the time.

But details of what precisely was agreed were sketchy. The energy minister did add that final decisions on how to exploit the Aphrodite gas could take days or weeks more.

A Feed study is basic engineering, which comes after the conceptual design or feasibility study. It focuses on the technical requirements, and generates a rough investment cost for the project. It is a key step prior to a final investment decision.

Depending on the scale of a project, a Feed can take anywhere from a few months to a year.

In early November it was first reported that Chevron sought a four-month extension for the negotiating period for the modification of the Aphrodite offshore gas field development and production plan. At the same time, the company was said to have requested a four-month extension on the deadline for starting the Feed. The company reportedly wanted to have the two four-month-extension requests run concurrently.

Under the 2019 production sharing contract, the companies were supposed to commence the Feed study by November 7, 2023.

Later in November, the energy ministry reportedly proposed a two-month extension for the Feed – pushing it to January 7, 2024. It was the government’s counter to the companies’ proposal for a four-month extension.

In May of this year, the joint venture had 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 points of disagreement included the construction or not of a Floating Production Unit (FPU) at Aphrodite, the construction of three instead of originally five production wells, and the timeline for delivery of the Feed.

Discovered in 2011, the Aphrodite reservoir 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).