Egypt and Eni-Total Consortium Set to Sign Major Agreement on Cypriot Natural Gas Export

Next month, a significant agreement will be signed by AP Egypt and a consortium of energy companies, including France's Total and Italy's Eni. This deal involves transporting natural gas from an undersea deposit within Cypriot waters to Egypt. There, it will be liquefied and processed for export. Cypriot Energy Minister George Papanastasiou highlighted the importance of this agreement, as it addresses technical aspects of transporting gas from the Cronos deposit to Egyptian facilities.

The consortium, which holds exploration licenses for seven out of 13 blocks in Cyprus' offshore economic zone, is expected to finalise its extraction and transportation plans before summer. The Cronos deposit is believed to hold more gas than the Aphrodite deposit, Cyprus' first major discovery, estimated at 4.2 trillion cubic feet. The host-government agreement will be signed during Egypt's energy summit from February 17-19, according to Egyptian Oil Minister Kadim Badawi.

Energy Summit and Collaborative Efforts

Egyptian President Abdel Fattah el-Sissi has invited Cypriot President Nikos Christodoulides to attend the summit. Badawi praised the "collaborative spirit" between the two nations in recent negotiations. This collaboration aims to utilise Egypt's existing infrastructure and leverage Cyprus' natural gas potential. The agreement marks another development in Cyprus' growing natural gas industry.

On the same day, ExxonMobil and Qatar Petroleum announced drilling at the Elektra well near their Glaucus deposit, estimated to contain 5 to 8 trillion cubic feet of gas. Papanastasiou mentioned positive signs of a natural gas deposit at Elektra, located approximately 6 kilometres beneath the sea surface. Preliminary drilling results are expected in early April.

Cyprus' Energy Transition

ExxonMobil and Qatar Petroleum hold exploration rights for two Cypriot blocks. Cyprus is transitioning its energy generation from crude oil to cleaner, cheaper natural gas. Plans for an onshore terminal to convert liquefied natural gas back into gaseous form have been delayed. Meanwhile, Cyprus intends to use a tanker from the terminal contract for gas processing.

Papanastasiou noted that Egypt has shown interest in using the Prometheus tanker until Cyprus completes its land-based infrastructure for importing gas for cheaper electricity generation. Due to contracts with energy companies, it's uncertain if Cypriot natural gas will meet the island's power needs. Cyprus may purchase natural gas from other markets, which would still be more cost-effective.

Future Agreements and Negotiations

Cyprus and Egypt plan to sign another agreement at the Egyptian energy summit regarding the Aphrodite deposit's natural gas transportation to Egypt. However, discussions with a Chevron-led consortium operating Aphrodite are ongoing. It remains undecided whether the gas will serve domestic energy needs or be exported after processing in Egypt.

The ongoing negotiations between Cyprus and Chevron highlight the complexities involved in determining how Aphrodite's resources will be utilised. As these discussions progress, both countries aim to maximise their respective benefits from this valuable resource.