Minister of National Infrastructure, Energy, and Water Israel Katz met his Cypriot opposite number, Minister of Energy, Commerce and Industry George Papanastasiou, on Thursday. "Globes" has learned that the two men intend to sign a memorandum of understanding on the construction of a submarine cable connecting the Israeli and Cypriot power grids, for the purposes of mutual power supply back-up. The MOU is due to be signed at the 2023 United Nations Climate Change Conference, COP28, in November-December in Dubai.
Israel and Cyprus seek to bring Greece into the plan at a later stage. The two countries are also planning a gas pipeline between them.
Another important matter that the ministers discussed was the status of the Aphrodite gas reservoir. They seek to reach an agreement that will end the twelve-year dispute over the reservoir. To that end, the commercial parties involved - Chevron, Shell, and NewMed Energy on the Cypriot side, representing 90% of the reservoir, and Israel Opportunity, Nammax Oil and Gas, Eden Energy Discoveries, and Petroleum Services Holdings (PSH) on the Israeli side - will hold talks between them with the aim of reaching agreement by the end of September. Such an agreement will allow the signature of an agreement between the countries by the end of the year. By contrast with the past, the commercial parties are showing signs of agreement between them being a possibility.
Israel and Cyprus are also interested in building a floating liquefied natural gas (FLNG) installation that will make gas exports more efficient, from Israel immediately, and from Cyprus in the future when it starts producing natural gas.
The gas reserves in the Aphrodite field, discovered in 2011, amount to 129 BCM ( billion cubic meters). The reservoir is in Block 12, at the south-west extreme of Cyprus’s economic waters. It abuts Israel’s economic waters, and 10% of the reservoir is within those waters, and known as the Ishai field.
The status of the reservoir has been a cloud over Israel-Cyprus relations. From time to time the Cypriots have taken measured unilateral steps to try to move an agreement forward. Six weeks ago, the Aphrodite partners, Chevron (35%), Shell (35%), and NewMed (30%), announced the start of drilling of the A3 appraisal well in Cypriot waters. The drilling of the well, intended to test whether production is possible, and if so how much, is expected to continue for two months. This represents an advanced step towards actual production.
NewMed announced two weeks ago that the partners had submitted to the Cypriot government a revised plan for development of the reservoir whereby a submarine pipeline will connect it to existing production facilities in Egypt, which will make production cheaper and shorten the development timetable - all this while, as mentioned, no agreement has been reached with Israel. The Aphrodite partners have met Papanastasiou to discuss progress on development of the reservoir, indicating the minister’s involvement. Papanastasiou worked for BP for 25 years.
The Aphrodite reservoir is 30 kilometers from the much larger Leviathan reservoir, which contains 631 BCM of natural gas.
Published by Globes, Israel business news - en.globes.co.il - on June 18, 2023.
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