Middle East

Cyprus signs US $9 billion gas deal with energy majors

Cypriot Energy Minister Yiorgos Lakkotrypis speaks during an energy ministerial summit between Greece, Cyprus, Israel and the U.S. in Athens, Greece, August 7, 2019. REUTERS/Costas Baltas/File Photo

NICOSIA: Cyprus announced Thursday it had signed its first natural gas exploitation deal worth $9.3 billion with a consortium comprised of industry giant Shell, US-based Noble and Israel's Delek.

"Noble Energy, Shell and Delek now have in their hands the first exploitation license granted by the Republic of Cyprus so they can commercialise the deposit," said Energy Minister George Lakkotrypis, shortly after the agreement was signed.

The 25-year license is for the Aphrodite gas field, the first to be discovered off Cyprus, by Texas-based Noble Energy, in 2011. It is estimated to contain over four trillion cubic feet (over 113 billion cubic metres) of gas.

The signing of the deal comes after the cabinet approved revisions to a production sharing agreement, made at the companies' request due to a significant fall in hydrocarbon prices since mid-2014.

The re-working of the production contract means Nicosia is set to receive an average yearly income of $520 million over an 18-year period.

Lakkotrypis said that under the new deal, the consortium is obliged to keep to a tight deadline to begin extracting the gas reserves - and generating revenues - by 2025.

In February, ExxonMobil and Qatar Petroleum discovered an even bigger natural gas reserve off the coast of Cyprus, holding an estimated five to eight trillion cubic feet.

Italy's ENI and Total of France are also heavily involved in exploring for oil and gas off Cyprus.

The Republic of Cyprus, an EU member state, has pushed ahead with exploring for offshore energy resources despite the collapse in 2017 of talks to end the Mediterranean island's decades-long division.

That has angered Turkey, which has had troops stationed in breakaway northern Cyprus since 1974 when it invaded and occupied a third of the island in response to a coup sponsored by the military junta then ruling Greece.

Turkey has launched separate exploration operations encroaching on Cyprus' exclusive economic zone, resulting in the EU approving a legal framework for sanctions on individuals and firms involved in those operations.

 

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