12° Nicosia,
22 June, 2024

Negotiations on Cyprus EEZ and Chevron continue amid disagreements

The challenges and high stakes in crafting the development plan

Yiannis Ioannou

Yiannis Ioannou

Two days of negotiations regarding the development plan (FDP) for block "12" ("Aphrodite") within the Cypriot Exclusive Economic Zone (EEZ) have concluded in Nicosia. These discussions involved the Ministry of Energy and senior officials from the consortium responsible for its management, which includes Chevron, Shell, and NewMed Energy.

The talks were prompted by Chevron's proposal for Aphrodite on August 25, which had initially been rejected by Cypriot authorities. The rejection led to a 30-day window for Chevron to return with an improved proposal. As it stands, both parties are slated to reconvene in early November, specifically on November 5-6, with various options under consideration.

These options encompass finding a mutually beneficial compromise to address key differences and exploring a potentially delayed approach for the consortium to initiate production at "12," which could reshape the negotiation terms concerning the overall exploitation plan.

Nevertheless, substantial disparities remain. Despite the Republic of Cyprus's commitment to exporting "Aphrodite" to the Egyptian terminal of "Idku," significant discrepancies exist in the technical and economic aspects of Chevron's August 25 development plan. These discrepancies revolve around:

- The number of wells designated for gas extraction from "Aphrodite."
- The transportation mode, especially in terms of the scale of the required infrastructure for the Egyptian terminal.
- The overall project cost, with Chevron's proposal being more cost-effective but potentially impacting state revenues for the Republic of Cyprus.

The primary point of contention centers on the transportation mode to Egypt. Chevron favors utilizing existing facilities off "Idku," while the Republic of Cyprus advocates for the presence of a floating production unit (FPU), aligning with Noble's 2019 proposal before their withdrawal from the consortium.

Chevron's position benefits from its vested interest in 'Aphrodite.' Nonetheless, Chevron's larger regional commitments in the 'Leviathan' and 'Tamar' fields, which exceed 'Aphrodite' in terms of gas volumes, underline the complexity of the ongoing negotiations.

For Nicosia, the prevailing message, particularly following President Christodoulides' meeting with Chevron's senior executive, Clay Neff, underscores a readiness to seek common ground. The consortium's presence in Cyprus' exclusive economic zone is viewed as not only economically significant but also geopolitically crucial.

[This article was translated from its Greek original]

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