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23 June, 2024
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''Aphrodite'' deal stalls between Nicosia and Chevron

Struggles over 'Aphrodite' development

Yiannis Ioannou

Yiannis Ioannou

November is not bringing any closer the prospect of an agreement between Nicosia and Chevron regarding the development of Block 12, also known as 'Aphrodite,' within the Cypriot Exclusive Economic Zone (EEZ).

Cyprus has engaged in months of negotiations with Chevron since the U.S. giant submitted a modified development plan (FDP) post-2019 in May. Unfortunately, Nicosia rejected this plan in a letter from the minister on August 25, giving Chevron a 30-day deadline to reconsider. The issue, as highlighted by 'K' in both its electronic and printed versions, appears to be reaching an impasse, with both sides acknowledging their disagreement.

Key points of contention include:

1. The number of wells designated for extracting natural gas from Venus.
2. The logistics and infrastructure dimensions concerning transportation to the Egyptian terminal.
3. The overall cost of the project, with Chevron's proposal being less expensive but potentially reducing state revenues for the Republic of Cyprus.

However, the primary point of disagreement, as 'K' is privy to, revolves around the second dimension, particularly the mode of transport in Egypt. Chevron favors utilizing existing Shell facilities off 'Intkos,' while Cyprus prefers a floating production unit (FPU), in line with the 2019 proposal from Noble before they left the '12' consortium.

Regional developments, especially the looming risk of a Middle East conflict post-October 7 and the Hamas strike on the Israel-Gaza border, seem to strengthen Chevron's stance in pushing for reduced development costs and suspending operations in the region, citing security concerns.

According to details from the CY-Chevron negotiations, the November 6 deadline for the 'Aphrodite' consortium to proceed with the pre-development phase of the field (FEED - Front End Engineering and Design) will likely not be met.

This deepens the deadlock, as both sides have not reached a consensus framework for modifying the development plan of Block 12 to bridge the existing differences. At this juncture, negotiations enter uncharted waters, potentially leading to a freezing of the 'Aphrodite' development plan and even the possibility of Chevron losing its rights to Block 12, or an international arbitration procedure (arbitration) should Nicosia decide to revoke the relevant licenses from the company.

Due to the mounting tension in the region and the potential for an extended conflict in the backdrop of the Arab-Israeli conflict, the prospects for energy cooperation and the development of blocks in the region are entering an intriguing phase. This period may witness the emergence of new trends and dynamics, particularly in terms of energy routes and investment plans.

Notably, the 'Tamar' block in the Israeli EEZ ceased production operations after October 9, as it potentially falls within the range of ballistic missiles possessed by Hezbollah in Lebanon. The status of the Israel-Lebanon agreement is also uncertain, especially if a broader regional conflict ensues, including a full-scale Israel-Hezbollah confrontation similar to 2006."

This version maintains clarity and fluency while making the content more accessible to readers.

[This article was translated from its Greek original]

Cyprus  |  chevron  |  government  |  Nicosia  |  president

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