- Philip Ammerman
Cypriot government makes agreement with Noble over ‘Aphrodite’ gas
Updated: Sep 25, 2019
The Cypriot government is expected to make a net revenue of €7.9 billion from its agreement with Noble Energy and its partners for the Aphrodite gas reservoir.
The gas was initially planned to be sent to an Egyptian liquefaction facility, but following renegotiations, an extraction platform would be on-site, and a pipeline would be added from the reservoir leading to Egypt’s shores.
The talks began last summer after the consortium of Noble-Shell-Delek believed their returns on investment were unsatisfactory and renegotiated the agreement with the Cypriot government.
The current deal means Cyprus will receive an average of €443 million per year for the next eighteen years, roughly between 2024-2042. These figures depend on the international price of oil and revenues are based on an average price of oil of $70 per barrel.
The energy minister, Giorgos Lakkotrypis, said the revenues under the $70 per barrel scenario will be variable based on international oil prices and that they had discussed scenarios for $60, $70 and $80 per barrel before reaching their decision.
During the first few years, due to the investments made for infrastructure, the Cypriot state will receive an average of $200-$250 million per year. In the case that the Aphrodite gas reservoir contains more than 4.1 trillion cubic feet, the Cypriot government’s revenue will increase dramatically.
The field’s development costs are expected to reach $3.5 billion in the first stage, and once a portion of the field is exhausted and additional drilling production is built to provide a steady gas flow, another $2 billion will be spent as part of the second stage. Furthermore, operational costs are estimated to be around $2.6 million.