12° Nicosia,
23 May, 2024
Home  /  News

Chevron's new proposal for ''Aphrodite''

Exploring the current status and advancements in the CCT-Chevron development talks

Yiannis Ioannou

Yiannis Ioannou

March 31 marked the end of the three-month deadline given by Nicosia to the US company Chevron, a key partner in the joint venture for the development of Block 12 ("Aphrodite") in the Cypriot EEZ. The negotiation is taking time and, as "K" thoroughly analyzed, it holds back the exploitation of the confirmed almost 4 tcf of gas discovered in the Cypriot EEZ in 2011. Chevron (holding 35% in "12" along with Shell, with 30% and NewMed, with 30%), as disclosed by sources at the Ministry of Energy, came back with an improved proposal for the Feasibility Development Plan (FDP), which marks the continuation of the negotiations and the extension of the actual development time of 'Aphrodite' - i.e. the arrival of gas in Cyprus or revenues from its sale to Egypt (as stipulated in the agreement). Converging reports, however, point to an ongoing negotiation for which there are intentions to conclude with an agreement by the end of the year.

Where We Stand

The configuration of the negotiation between Chevron and DR in recent months culminating in Chevron's May 2023 proposal (i.e., in relation to Noble's original development plan, prior to its exit from the "12", from 2019) is rooted in key differences including those relating to:

1. The total cost of the investment, which Chevron seeks to reduce by one billion dollars (from 3.6 to 2.6)
2. The processing, where Cyprus insists on a floating production unit (FPU) in the field versus the use of Shell's infrastructure off Egypt (West Delta Deep Marine/WDDM)
3. The total number of wells and volumes (Chevron wants three while Nicosia wants 5 with output respectively at 650 and 800 (mm cfd)
4. The total length of the pipeline to be built to Egypt

Nicosia's position - Nicosia's red line - for FPU seems to be accepted by Chevron with the renewed proposal, according to well-informed sources, favoring the floating production unit on the field but remaining economically "scaled down" both in terms of production (output less than 600 mm cfd) and logistically (e.g., pipe). In any case, the route remains to Egypt (either to the Indus terminal or directly to the country).

The Big Picture

How the CD-Chevron tug-of-war will shape up in terms of the final development plan will depend on a number of factors both at the level of the big picture of the region's energy (increasing energy needs of the always fragile economically and politically fragile Egypt, the war in Gaza, etc.) and in relation to the aspirations (at the economic level) for Nicosia. The only thing that seems to be confirmed for now is that the development of Aphrodite will be delayed, significantly, even given that the discovery was made in 2011 and marks a decade since the field was declared commercially viable. Beyond that, the good scenario is based on: acceptance, with or without amendments, of Chevron's renewed proposal an aspect that will accelerate developments and a, less good, scenario where disagreements will persist and the whole issue of negotiation will be postponed to an even later time or even worse move towards deadlock - going as far as legal arbitration. However, the presence of Chevron, a company of US interests, plays a role in the geopolitical extension of its presence in the Cypriot EEZ in how the final decisions will be weighed, without, however, geopolitics completely replacing the economic and technical aspects.

[This article was translated from its Greek original]

Cyprus  |  energy  |  USA

News: Latest Articles