Cyprus has made five considerable offshore gas discoveries since 2011. But more than a decade on, none has been developed. Argus sat down with Cyprus' energy minister, Giorgos Papanastasiou, at the Adipec conference in Abu Dhabi last week to discuss how things are progressing at a number of these projects, and how current regional tensions are affecting plans. Edited highlights follow:
How are the five discoveries in Cyprus' exclusive economic zone (EEZ) progressing? Could we start with the 2.5 trillion ft³ Cronos discovery in block 6?
At this point, we are expecting the development and production plan (DPP) from [operator Italian firm] Eni, which it promised will be delivered at some time in November-December. We expect it will have two phases. The fast-track, which is phase 1, and phase 2, which will recover more gas from the well. The direction is via the infrastructure of the Zohr field [in Egypt].
Has it actually been decided that the gas from Cronos will be recovered through Zohr infrastructure? We understand that there was a disagreement with TotalEnergies, Eni's partner, on this.
It is being discussed. But you ultimately need to see it in the DPP. Unless you have the DPP signed off by the government of Cyprus, you won't have an agreement. But up until this point in time, there have been verbal conversations.
To be clear then, there is no disagreement between TotalEnergies and Eni at the moment?
No — it is not there. That is the plan of Eni which verbally has been accepted [by the Cypriot government].
What is TotalEnergies' stance? Do they also have to be on board?
This is something between the partners. But as far as we are concerned, this [tie-back to Zohr] is acceptable. If this is what they will deliver in the DPP, that would be fine with us. It will be a tie-back to the Zohr facilities, and connected to Egypt's 5.5mn t/yr Damietta LNG export terminal.
And this is Cyprus' preference?
The preference was to have a floating production unit [FPU] to achieve higher recoverability. But we still understand that the fast-track as well, which means that first gas without the FPU, will be in 2027. So that is important for us as well.
So discussions between the two companies, as far as you are concerned, are for them to sort out?
They will sort it out. However we communicated to Eni that at every stage of any agreements they have with any party, we have to be part of it and do a sense check.
As for the timeframe for such an agreement — is it correct that their licence for block 6 is set to expire next year? Is time on their side?
Not for Cronos, no. But in any case, if it is expiring for Cronos, we will extend it. Of course.
Given the current state of discussions, when do you expect production to start at Cronos?
Eni's target is to get the first gas to the surface in the first six months of 2027.
And how about Aphrodite — Cyprus' first ever discovery in 2011 — how are things progressing there?
On Aphrodite, we have given an extension to the operator until the middle of January. They have provided a revised initial plan which is not completed yet, but it is heading in the right direction. And the right direction for us is what was agreed in the past, in 2019, which includes an FPU, a short pipeline to Egypt for domestic [consumption] or liquefaction.
As far as Cyprus is concerned, you are happy with the latest plan on the table?
I believe this time we are happy, yes. And not only that, but we also see some traction on behalf of the operator as well.
Are you expecting production at Aphrodite to also potentially begin in 2027?
Aphrodite, I don't think it will be 2027. In the current circumstances it very much depends on what we see as the final DPP. Also on when the pre-Feed [front-end engineering and design] will be done, the Feed and the FID [final investment decision]. But the way it's progressing, it could be 2030.
So the 2022 Cronos discovery would be the first to come on stream?
Yes, because of the existence of infrastructure that is only a few kilometres away.
And how about the 5 trillion-8 trillion ft³ Glafcos discovery from 2019?
At Glafcos, the operator is ExxonMobil. It will be doing more drilling in the area of block 10 and block 5, and depending on any new discoveries, it will decide how to commercialise it.
So, as of now, with the discoveries that have been made to date, is that not considered for commercialisation?
This is a difficult question — it's for the operator to decide. But we believe that Glafcos on its own is a discovery that can be commercialised. Smaller discoveries and quantities by far in the world have been developed. But it depends on the appetite of the operator.
Assuming first production in 2027, what is the plan for this gas?
There won't be any connection directly to Cyprus. But indirectly there will be a connection, and when there is some gas, that will be liquefied and find its way back to Cyprus. As soon as we have the facilities — the FSRU [floating storage and regasification unit] and the facilities operating, which will happen sometime at the end of 2025, or the beginning of 2026 — we can get some product in kind, liquefy it and get it back for regasification. The FSRU is already constructed. We are receiving it sometime in the next few days, hopefully. There was an agreement between the contractor and the public company of natural gas, and it will be sailing from Shanghai in the next few days.
With heightened tensions in the region, have you seen any impact on companies' appetite or activities offshore Cyprus?
To be honest, in energy we haven't seen any reluctance because of the turmoil. Other investments onshore, there are some assessments that the investors are doing. But when it comes to energy… you know that you can use energy to bring some stability. And we want to believe that through Cyprus' EEZ and wealth that sits there, Cyprus can be a contributor through energy to create some stability. This is exactly what is happening with Egypt. Egypt needs product for its domestic market. The more the product, the more the stability, because you provide electricity, which is a commodity for the citizens of Egypt. At the same time, through the Damietta or Idku LNG terminals, we can get some product for the international markets which can be converted to income for the citizens of Cyprus.
And with regard to security and infrastructure in the east Mediterranean?
No, no — we haven't seen anything, but there is some vigilance. Cyprus has a good relationship with all the world. We are not taking any sides, supporting any party, and try to be very careful about how we behave in the neighbourhood there.
