Hopes to export gas to Egypt fading as oil prices remain low, Lakkotrypis says


By Stelios Orphanides

Energy Minister Yiorgos Lakkotrypis said that the development of the Aphrodite field, Cyprus’s first natural gas find, hangs in the balance as the current energy prices seem prohibitive for the investment required to export gas to Egypt.

The minister, who was commenting on state radio CyBC on Wednesday, a day after he announced that the latest drilling by the consortium of France’s Total and Italy’s Eni discovered less than 1 trillion cubic feet (tcf) of natural gas in block 11 of the Cyprus exclusive economic zone (EEZ), said that negotiations with the Arab neighbour to sell production from the 4.5 tcf Aphrodite reserve via pipelines are dragging on, three years after they were launched.

In November 2014 months after the price of oil started to drop from levels over $100 per barrel, Lakkotrypis had said that he expected negotiations with Egypt to allow the export of natural gas as early as 2018. Early today, the price of Brent crude dropped 0.2 per cent to $54.18 per barrel, while that of the U.S. crude rose slightly to $48.25.

“If there is no result with respect to the sale of natural gas which is the most important for the development of Aphrodite to go ahead, this is attributable to the oil prices,” he said.

Egypt, which announced two years ago the discovery of Zohr, a 30 tcf gas reserve in its EEZ close to that of Cyprus, is only interested in buying Cypriot gas for re-export via its two largely mothballed liquefaction terminals at Idku and Damietta, the minister said. He added that the most populous Arab nation can cover its domestic demand for energy with Zohr.

“We are doing everything we can and approach this project from all angles, including how to reduce the development cost or maximise the price to make the project commercially viable,” he said, adding that the project requires up to €3bn in investment.

Talks with Egypt are getting even more complicated because the plant in Idku also needs Israeli gas from the 16.5 tcf Leviathan finding, he said.

Lakkotrypis said that Cyprus’s hydrocarbon exploration programme will continue with at least two drillings by Eni and Total in block 8 until early next year followed by two more successive attempts by the ExxonMobil-Qatar Petroleum consortium in block 10 by in the second half of next year which could provide more certainty about quantities of hydrocarbons in Cyprus’s EEZ.

While Total’s discovery at Onesiphoros was below expectations and as a result “not commercially viable on its own,” the data collected “are really priceless,” as they may help in future exploration drillings, he said.


About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Barry White

    Translation: Tragic. Not even enough to fill a brown envelope let alone a pipeline.

    But our gas warriors carry on with large salaries and allowances, plump pensions and delusional speeches simply to keep their chairs.

    • Philippos

      I think that that just about sums it up. This “Announcement” is supposed to be a “Surprise”? Nobody wanted to wait and listen when it was frigging obvious that the prevailing Natural Gas prices in context of our gas location made no sense at all and that was ignoring the on shore infrastructure costs. I do like Mr Ouzaids remark above because if we could replace Oil, currently about 14 times the price of Natural Gas, per respective unit, in our power stations, that might well make very good sense especially given the rather small quantities actually thought to be under the seabed. It would utilize the CYP 4.5 million spent twice at Mari by us (AHK on our behalf) for conversion of some of the Halls to Natural Gas fuel and never operated.

  • Didier Ouzaid

    How about using the Aphrodite gas for domestic purposes in the Vasilikos power plant instead of looking out to purchase natural gas from third party providers, as they’ve failed to do for the past 10 years or so? Too expensive as well?

    • Cydee

      Good suggestion.

    • HighTide

      The cost of the pipeline from the well to the island and the necessary natural gas processing plant is prohibitive for such small quantity.

      • Didier Ouzaid

        Plant? What about using an onboard LNG processing vessel? The cost of a pipeline from that boat to shore wouldnt be as high as a processing plant.

        • HighTide

          Such processing vessels are very expensive and become economical only with sufficient extraction quantities.

    • Barry White

      Using the gas internally, while economically sound, requires ” someone” to put their hands in their pockets for the billion or so needed to complete production drilling, pipelines and commissioning.

      The someone is ‘skint’ with no money and limited ability to borrow.

      Add in the hundreds of millions Cyprus has to pay plus interest to the oil companies for the payments and costs incurred to date before seeing a bean, not a very attractive project to fund at current prices.

      Then there is the matter that has not been trumpted to the Cypriot population.

      Cyprus has no right to exploit Aphrodite until Israel agrees and Cyprus provides to Israel free a 5-10% interest in all Aphrodite gas and revenues off the top.

      Not much room for jam nor brown envelopes. The current oil.imports for electricity generation provides for both. Hence little interest in using the gas locally by the political and ‘business’ elite in charge.

  • Douglas

    Oil prices too low tell that to the gasoline stations in Cyprus their prices increased as the oil prices plummeted,no excuse really !!