Intensive consultations held earlier in the week in Nicosia between the Cyprus Ministry of Energy, Industry and Trade (YEBE) and the Cyprus Hydrocarbon Company (CYC) on the one hand, and with all international oil companies involved in exploration. , production and production plans for another transmission of Cypriot natural gas should have been completed a few years ago.

It is indeed remarkable that for nearly a decade no attempt has been made to bring together all the relevant stakeholders of the Cyprus energy program. This meeting, although unjustifiably criticized by some quarters within the country, was more than necessary for reasons beyond the reasonable review of domestic politics that takes place when a new minister, and even more so a new President of the Republic, takes office just two months after his election. inauguration.

This particular initiative shows that the new political leadership has realized the potential impasse in which the energy program of the Republic of Cyprus finds itself ten years after the first confirmation drilling at the Aphrodite field, which led to the announcement of commercial viability in 2014. potential field. Despite the complex geology and reservoir fragmentation, Noble and Delek’s reserves estimate was in the order of 4.4 TKP (trillion cubic feet), which, however, left several uncertainties regarding the confirmed volume of the deposit. , i.e. those volumes of natural gas for which there is more than 90% probability that they will be suitable for commercial exploitation.

In practice, this meant that the companies that would develop the field could not make a final investment decision on the development of the field until the exact size of the field had been clarified during the second confirmation drilling. This was convenient for Aphrodite’s shareholders because, combined with delays in the development of the field caused by a dispute with Israel over the field’s boundary, it “allowed” them to give priority to the field they were interested in developing. firstly, namely Leviathan, the first phase of which was mined and partly exported to Egypt via Israel’s existing pipeline network in 2020. The need for this drilling has been known since 2013, but, unfortunately, it took ten years on May 4 to start it, 2023 and will give results in three months. That this drilling was delayed by ten years is indicative of the problems inherited by the Christodoulidis government, but the delay in drilling is not the only problem. The intergovernmental agreement signed between Nicosia and Cairo in 2018 on a pipeline through which Cypriot natural gas will be exported to Egypt is hardly mature from a technical and economic point of view. While this was the option that made sense at the time of its signing, the Leviathan’s export to Egypt in 2020 and Egypt’s insistence that Cypriot (as well as Israeli) natural gas exporters not have direct access to liquefaction terminals have dramatically changed the situation. Egypt cannot become a transit hub for the Southeast Mediterranean if it absorbs all Israeli and Cypriot exports to cover its own consumption, so it will export more Egyptian LNG at prices three to four times higher than in the domestic market.

This is a common problem for the energy companies operating in Cyprus and Israel, as well as for the governments of the two countries, who are called upon to find an alternative to the “transit” monopoly of the Egyptian liquefied and export infrastructure. One of these alternatives could be the development of floating liquefaction terminals that simultaneously function as a production platform for medium and large deposits, but still the cost of this option is prohibitive for the proven reserves of Cyprus and Israel, with partial, perhaps with the exception of the second stage production of Leviathan, which will start by 2026/2027. Another option could be the EastMed pipeline.

The agreement between Nicosia and Cairo in 2018 on a pipeline through which Cypriot natural gas will be exported to Egypt is hardly mature from a technical and economic point of view.

The third option, which could be technically and economically the most logical for Cyprus and Israel, would be the construction of a pipeline that would bring Israeli and Cypriot natural gas for liquefaction at a floating export terminal in the Vasilikos area, while meeting the meager domestic consumption needs of Cyprus, for the time being. which will not exceed 0.4-0.6 billion cubic meters. m/year during the first ten years of the use of natural gas in the energy mix of Cyprus. This use is absolutely essential to reduce the cost of power generation and replace the polluting and inefficient installations that fueled Megalonis for decades.

The choice of FSRU, i.e. LNG import and regasification, promoted by the second government of Anastasiades, seems to be facing very serious delay problems, as the project has already received two annual extensions without a new schedule for its work. have been clarified. However, the Israel-Cyprus pipeline plan cannot work with only the small reserves (Olympos and North Karis) discovered by Energean in the Israeli EEZ.

To provide a real alternative export pole to the Egyptian infrastructure monopoly, the capacity of this pipeline and its associated floating liquefaction terminal (or floating terminals) would need to intercept some or all of the as yet undetermined quantity of Venus and part of the export potential of the second phase of the Leviathan development.

The visit of the Cypriot Minister of Energy to Israel on June 14-15 and the results of the confirmatory drilling at Aphrodite by July will bring more clarity to this new and promising aspect of the Cypriot energy strategy.

Dr. Theodoros Tsakiris is Associate Professor of Geopolitics and Energy Policy at the University of Nicosia.