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.