Israel blocking Aphrodite gas field development

Gas exploration near Lebanon in 2013 photo: Mohammed Azakir, Reuters

Energy Ministry director general Udi Adiri has told Shell, Noble Energy and Delek Drilling they cannot develop the Cypriot reservoir until the border dispute with Israel's Yishai license is settled.

Israel is opposed to the development of Cyprus's Aphrodite offshore natural gas field until the dispute over the border with Israel's Yishai gas field is settled, Ministry of Energy director general Udi Adiri has made clear in a letter sent to the reservoir's rights owners Delek Drilling LP (TASE: DEDR.L), Noble Energy Inc. (NYSE: NBL) and Shell.

Adiri wrote to Delek Drilling CEO Yossi Abu, Noble Energy SVP Keith Elliot and Shell East Med GM Chris Breeze, "I wish to advise you that the State of Israel has not relinquished its share of the Aphrodite-Yishai natural gas reservoir, and has no intention of doing so."

The letter was sent last month following comments by Israeli businessman Beny Steinmetz, who holds a stake in the Yishai license, that the Israeli government is not doing enough to protects the rights of the license. Steinmetz and his partners claim that the gas in the Yishai license could be worth as much as NIS 3 billion.

Shell and Noble Energy each have a 35% stake in the Aphrodite field while Delek Drilling holds the remaining 30%. On November 7, Delek Drilling reported an agreement with the Cypriot government to invest $2.5-3.5 billion in developing the Aphrodite field over the next four to six years including setting up the infrastructure to export the gas via Egypt. The value of the gas in the Aphrodite field is estimated at more than $9 billion.

In his letter to the Aphrodite rights owners, Adiri points out that the Aphrodite-Yishai field is a cross-border natural gas reservoir, "and as such Israel and Cyprus have held several years of negotiations for the purpose of reaching a bilateral agreement regarding the exploitation of the Aphrodite-Yishai field. One of the options raised for consideration was the possibility of initiating direct negotiations between the licensees of both countries, subject to approval by the two states."

He added, "However, up to this point, the two states have not concluded the necessary agreement that would facilitate the fair exploitation and development of the field, for the benefit of all the involved parties."

Consequently, Adiri Stresses, "I also wise to advise you of the position of the State of Israel that the development and exploitation of the Aphrodite-Yishai field by the licensees of both states must not commence prior to reaching an agreement between the government of Israel and Cyprus."

The holders of rights in the Yishai prospect, Israel Opportunity Energy Resources LP, Nammax Oil and Gas Ltd. (controlled by Beny Steinmetz), Eden Energy Discoveries Ltd. (TASE: EDN), and AGR Petroleum Services Holdings AS have welcomed the Israeli government's "unequivocal announcement."

Published by Globes, Israel business news - en.globes.co.il - on December 8, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Gas exploration near Lebanon in 2013 photo: Mohammed Azakir, Reuters
Gas exploration near Lebanon in 2013 photo: Mohammed Azakir, Reuters
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