Chevron buys time as Cyprus and Israel still negotiate

Chevron took a step back this month after it postponed the drilling of an appraisal well offshore Cyprus, a plan that initially caught Israel by surprise and prompted an impromptu visit to Nicosia last summer as the two countries have yet to resolve a dispute.

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NewMed Energy, a partner in Cyprus’ Chevron-operated Block 12, said last week that partners got an extension to complete a well in Aphrodite gas field by August 2023, essentially extending for nine additional months a drill that had been scheduled no later than November 2022.

Back in September, Chevron, Shell, and NewMed, formerly known as Delek Drilling, approved a $192 million budget for the appraisal drilling, prompting the Cypriot energy ministry to expect a finalized development concept from the American giant by the end of the year.

But American plans to drill early next year in Aphrodite, a field shared jointly by Cyprus and Israel, reportedly irked Israeli Energy Minister Karine Elharrar, whose predecessor had sought an agreement with Nicosia.

Elharrar rushed to the island after Pilides said in interview with Bloomberg that “a realistic date for production” would be included in a Chevron presentation before the year was out.

Chevron, which was seen as a glimmer of hope in Nicosia after the American company acquired Aphrodite stakes from Texas-based Noble Energy, was expected to present its final development plan for Aphrodite with date of production set in 2027.

Last month Cypriot Energy Minister Natasa Pilides switched gears at the Eastern Mediterranean Gas Forum held on the island, heeding European calls for short and medium term goals for Cyprus, essentially placing long-term plans for an EastMed pipeline -seen by many experts as undoable- on the backburner.

According to the Cyprus News Agency, Pilides said “Chevron is considering the possibility of transporting natural gas from Aphrodite to Egypt,” adding this was the most prevalent scenario.

"These options can certainly be implemented faster than the East Med pipeline," Pilides said.

Energy pundits have been talking up two scenarios earlier this year for Cyprus, essentially either joining Aphrodite to the Israeli side or linking Cypriot gas to Egypt for LNG exports to Europe.

Last year Nicosia signed an agreement with Cairo and Athens during an EMGF meeting held in Greece.

Egyptian President Abdel Fattah al-Sissi said it was “crucial that we all strive to take advantage of this momentum to give a parallel impetus to the project to build an offshore pipeline to transport natural gas from the Cypriot field ‘Aphrodite’ to the two Egyptian liquefaction stations of Damietta and Idku.”

In August 2020 Pilides posted on Twitter that the CEOs of Chevron and Noble Energy had “reaffirmed their commitment to the development of Aphrodite gas field in a teleconference with the President of the Republic of Cyprus.”

But with different synergies emerging in the region and as Europe looks for short-term alternatives to Russian gas without delays, it remains unclear what conditions will shape key factors in Cyprus’ energy panning.