Israel and Cyprus will take their disagreement over the distribution of gas in the joint Aphrodite reservoir to international arbitration, according to a report published by Globes.
Israel and Cyprus signed an agreement setting the borderline between their respective exclusive economic waters in 2010.
The agreement, which was designed to arrange development of gas reservoirs lying within the territory of both countries, was to have been signed a few months later, but this did not happen.
Energy ministers from Israel, Greece and Cyprus are to meet next week to discuss a unitization agreement in addition to construction of an undersea gas pipeline connecting Israel and Europe.
In the absence of a distribution agreement, Israel is refusing to allow Cyprus to develop Aphrodite
In the absence of a distribution agreement, Israel is refusing to allow Cyprus to develop Aphrodite because pumping gas from it will also cause gas to be pumped from the Yishai prospect.
The Aphrodite natural gas reservoir is located mostly on the Cypriot side of the maritime border, but some of it also lies within the Yishai license on the Israeli side.
Noble Energy and the Delek Group are the main partners of both Cyprus’s Aphrodite reservoir and Israel’s Tamar and Leviathan gas fields.
Because the gas in the Yishai prospect is part of a single geological reservoir, its production depends on agreements between both countries, according to Globes.
The amount of natural gas in the reservoir is estimated at approximately 7 to 10 BCM on the Israeli side, and 100 BCM on the Cypriot side, according to the Israel Ministry of National Infrastructure, Energy and Water Resources.
Benefits for all sides
Cyprus Energy Minister Giorgos Lakkotrypis said that the companies involved will first need to finalise their consultations before the two countries take the next step.
“We were in agreement recently that we would ask the companies to find a settlement in the dispute regarding the quantities that could possibly extend into the Israeli area. If this is not possible, meaning the companies cannot agree on their own, we will look into the arbitration option,” Lakkotrypis said.
Energy Minister Yuval Steinitz also spoke about the consultations at company level.
“There are negotiations that have unfortunately been going on for years, but we recently reached an agreement with the Cypriots that seems reasonable to us. Based on the figures provided by the two sides, the international arbitrator will rule what percentages Israel and Cyprus will receive,” Steinitz said.
The agreement would be subject to approval by both governments.
Both sides are motivated to bring this dispute to a close since a number of export agreements for Aphrodite gas are at the end stage prior to signing.
The Israeli Ambassador in Nicosia, Shmuel (Sammy) Revel, said on Wednesday that the two countries have very good, very transparent, very direct contact on the issue of Aphrodite.
“We are going to continue to find a way to work together to bring this project forward and to make the most of the natural gas reserve that we have in our region,” Revel said.
The Aphrodite reservoir was discovered in Cypriot waters on December 28, 2011.
Tests conducted following the discovery showed that the reservoir contained 4.54 trillion cubic feet (TCF) of natural gas about the same amount as in the Karish and Tanin reservoirs.