Jun 07 2019

Cyprus to gain $9 billion from gas deal with U.S.-based Noble Energy

Cyprus Energy Minister Giorgos Lakkotrypis said the island would earn more than $9 billion in gas revenues over 18 years from an agreement with U.S.-based Noble Energy, the Turkish newspaper Hürriyet said on Friday. 

The agreement revises the original production-sharing contract between the government of Cyprus and U.S.-based Noble Energy, the Dalek Group of Israel and Royal Dutch Shell, and includes the distribution of revenues from natural gas exploitation from the Aphrodite field in the eastern Mediterranean and the transfer of natural gas by underwater pipeline to Egypt’s Idku liquefied natural gas (LNG) terminal.

Lakkotrypis said the deal would bring in $520 million a year in revenue. The minister said the new agreement would yield $850 million less compared to the existing contract, but it would enable Cyprus’ energy plans to be materialised. 

According to the deal, the shareholders of Aphrodite will have an increased share from the gas revenue to offset infrastructure investments at times when international oil prices are low, but their revenue will drop in favour of the Cyprus government when oil prices are up, the Cypriot minister said. 

“This is, nevertheless, Cyprus’ first gas export and places the country on the map of gas exporters. I suppose it can also be seen as Cyprus’ answer to Turkey’s threats to its gas exploration and development,” Hydrocarbons Company CEO Charles Ellinas told New Europe. 

Turkey opposes what it calls Cyprus’ unilateral moves to exploit offshore natural gas and oil reserves and says the breakaway Turkish Cypriot north of the island, which is only recognised by Ankara, should receive a fair share of resources from the disputed island.

The internationally recognised Republic of Cyprus says Turkish Cypriots will receive their share once the island is reunited. Turkish troops invaded the northern third of Cyprus in 1974 in response to a short-lived Greek Cypriot coup aiming to unite the island with Greece.

The Aphrodite gas field is off the southern coast of Cyprus in block 12 of the country's maritime Exclusive Economic Zone (EEZ). Turkey has made claims to parts of blocks 1, 4, 6 and 7 of the Cyprus EEZ. 

Turkey sent a drillship to waters well inside the Cyprus EEZ in early May, while Turkey’s energy minister said this week that a second drillship named would begin drilling off Cyprus by July.

Cypriot President Nicos Anastasiades said in May that Turkey was conducting a “second invasion” by violating the country’s EEZ.