Filenews 15 February 2025 - by Chrysanthos Manoli
Yesterday's agreement between Energy Minister George Papanastasiou and Chevron's co-president, Frank Cassulo, for a new plan for the development and production of the Aphrodite deposit is considered very important by the energy people.
The plan includes the installation of a floating production unit and an independent pipeline for the transport of natural gas to Egypt, as requested from the beginning by the Republic of Cyprus, initially meeting with the disagreement of the American giant.
It is the wish of both sides to proceed quickly with all actions for a preliminary technical study in order to make a valid cost estimate of the investment and the prospects from marketing. On Monday, in the presence of Mr. Papanastasiou, the agreement of the Egyptian Government with the ENI – Total consortium for the disposal of gas from the Kronos field in Egypt and the corresponding memorandum between Egypt – Cyprus and the consortium of Chevron, Shell and New Med for the Aphrodite field will be signed in Cairo.
There is no information on other important points of the new development plan of the Aphrodite deposit. The assessment is that at this stage no new regulations have been defined regarding the economic aspect of the production and sale of natural gas, i.e. the rates of profit reaping by the two parties. This part of the negotiations will take place when there is a clearer picture of the techno-economic data of the investment. In order to form this picture as quickly as possible, the two parties have reportedly agreed on near milestones to conduct a preliminary technical study (pro-FEED), which will be followed by the final FEED study. If this paves the way for profitable development and marketing of the deposit, the final investment decision (FID) and the planning of works on the deposit will follow.
Initially, Chevron had estimated that the development plan as requested by the Ministry of Energy, namely the utilization of a modern floating production unit on the deposit, would cost about 4 billion euros, an amount that had been considered excessive by the Cypriot side, even a deterrent to future steps of cooperation.
It seems that in the intensive and difficult negotiations that followed, understandings were made that allow optimism that the cost for the floating unit will be substantially lower, so that the cost-benefit ratio will work in favour of the investment. Thus, a difficult phase in the relations between the two sides was ended, in the context of which the continuation of the management of the deposit by the consortium was also tested.
Full text of the Communication
The joint announcement of the Ministry of Energy and Chevron, which acts as first violin in the joint venture for the exploitation of Aphrodite, was issued around 6 p.m. yesterday, shortly after an emergency meeting of the Council of Ministers, which was briefed on the development by Mr. Papanastasiou and also approved the final texts to be signed by the Energy Minister on Monday in Cairo.
The joint declaration reads as follows:
"The Ministry of Energy, Commerce and Industry and Chevron Cyprus Limited (CCL), together with the other companies in the joint venture, Shell and NewMed, announce the approval of the amendments proposed to the Development and Production Plan (PCP) of the Aphrodite gas field (in Block 12 of the Exclusive Economic Zone of Cyprus). The Republic of Cyprus and Chevron, together with its partners, look forward to the development of this important project.
"The Republic of Cyprus approved today the Development and Production Plan of the Aphrodite field, which had been officially submitted by the Aphrodite consortium consisting of Chevron Cyprus Limited, BG Cyprus Limited (Shell) and NewMed Energy LP", said the Minister of Energy, Commerce and Industry, Mr. George Papanastasiou.
"We look forward to the rapid development of the deposit through Egyptian facilities, which will be a tangible step towards consolidating the role envisioned by Cyprus in the region's energy sector, for the benefit of the country and its people. We will closely monitor the fulfilment of the obligations of Chevron and its partners under the approved Development and Production Plan and the Production and Pro-rata Allocation Contract."
"We welcome this important development and our productive contacts with the Government of Cyprus," said Frank Cassulo, Chevron's Vice President for International Research and Production. "Chevron values the cooperation with the Republic of Cyprus and we believe it is important to develop Aphrodite for the benefit of both the Republic of Cyprus and the Eastern Mediterranean. This is also in line with our strategy to provide affordable, reliable and increasingly clean energy."
The approved SSP includes a Floating Production Unit (also known as a gas processing plant) in Cyprus' Exclusive Economic Zone and a pipeline for the transport of natural gas to Egypt.
The approval of the amendments to the SSP and the milestones of the Production and Pro-rata Allocation Agreement are aimed at advancing the technical and engineering work for the Front End Engineering and Design studies and towards a Final Investment Decision for Aphrodite".
