Today's agreement between the Italian ENI and the Cypriot government is, on the one hand, a vote of confidence in Nicosia and, on the other hand, strengthens the energy footprint of Cyprus. The decision of the Italian giant to proceed with the construction and installation of the infrastructure for the development of the Kronos field is another important step for the exploitation of Cypriot natural gas in the eastern Mediterranean.
At 12 noon, President Nikos Christodoulides will meet at the Presidential Palace with a delegation of ENI, led by General Director of Operations Guido Brusco. Immediately afterwards, the signing ceremony of the EPCI contract (design, supplies, construction and installation) for the deposit will take place on the Hill.
According to what was revealed by the Wall Street Journal, the contracts that will be signed at noon in Nicosia have a total value of up to $1.8 billion. They concern the construction of underwater infrastructure, which will allow the extraction and processing of natural gas, as well as its transport through pipelines to Egypt.
A senior government source, with whom "Fileleftheros" spoke, confirmed the WSJ's information. According to the same source, the value of the contracts will range between $1.3 billion and $1.8 billion.
The joint decision of ENI and France's TotalEnergies to start the construction of the submarine pipelines will allow the start of Cypriot natural gas production in the first half of 2028. The two companies jointly manage the Kronos reserve.
In July, the decision was made
As reported by the WSJ, and confirmed by Nicosia, the two companies decided last July to proceed with the project, prioritizing its rapid development. A decisive role in the decision was played by the utilization of existing pipelines and treatment facilities.
Last September, Halliburton announced that it had secured the contract for the project's drilling, while McDermott announced that it had been selected for the underwater component, which is estimated to be worth between $500 million and $750 million.
Strengthens the EU's target
These moves are of broader energy importance, as Cypriot gas will contribute to the European Union's effort to become independent from American and Russian natural gas.
Conflicts in the Middle East, most notably the ongoing U.S.-Iran standoff over the Strait of Hormuz, have caused turbulence in international gas markets and are forcing Europe to urgently seek alternative sources of supply. This is the second such crisis in five years, following Russia's full-scale invasion of Ukraine in 2022.
As the WSJ notes, Europe is increasingly dependent on imports of American liquefied natural gas (LNG). Therefore, the exploitation of deposits closer to the continent is expected to reduce some concerns about its energy security.
Geopolitical profit
For Nicosia, today's ceremony mainly offers geopolitical gain, as the proceeds from the sale of Cypriot natural gas are not expected soon. As competent government sources note, the decision of the Italians moves in the direction that the Cypriot government has been indicating for years to its partners in the EU: Europe must give more importance to energy sources within the Union, in order to become independent from third suppliers, such as the USA and Russia.
At the same time, given the situation in the Middle East and the consequences of the Iran-US conflict, the search for alternative energy sources is now imperative for Europe. In this direction, the European energy giants seem to be taking a leading role.
An advantageous solution
The possibility of utilizing the existing Egyptian infrastructure in the neighboring Zohr field makes the project more economical.
ENI will only need to build the pipelines that will connect the drilling to the existing network of the Egyptian field. At the same time, an additional pipeline will be built, connecting the Zohr gas processing plant with the Damietta LNG terminal.
The liquefied natural gas will then be loaded onto ships and transported to Europe.
According to initial estimates, the Saturn field contains more than 3 trillion cubic feet of natural gas. Production is expected to stabilize at about 500 million cubic feet per day.
ENI manages one more block in the Cypriot EEZ and participates in two more, which are managed by TotalEnergies.
Intense activity
The WSJ points out that the project is moving forward during a period of intense activity in the oil and gas sector in the wider region.
It states, among other things, that the American Chevron is in talks to promote the Aphrodite natural gas project, off Cyprus. The field is jointly owned by Chevron, Israel's NewMed Energy and Britain's Shell.
According to the report, Shell has agreed to sell its stake in the field to the Hungarian group MOL. The deal is expected to be completed in early 2027.
