After President Christodoulides' visit to Israel and his meeting with Netanyahu, two key issues have emerged regarding Nicosia's energy strategy:
1. The possibility of an undersea pipeline connecting the Leviathan fields to Cyprus, transforming Vasilikos into a hub for exporting liquefied natural gas (LNG) to both European and potentially Asian markets. This approach aligns with the post-2017 trend of modular LNG facilities, emphasizing smaller plants. An alternative option mentioned by Energy Minister Panastasiou is to consider Egypt as the connection point. It is worth noting that constructing a 320 km pipeline of this nature would entail an approximate cost of €450 million while establishing a liquefaction plant in Cyprus is estimated at €1 billion.
2. The proposal to expedite the exploitation of the 'Aphrodite' field for power generation purposes within a timeframe of 18 months.
In 2011, during the Christofias administration, the discovery of a natural gas field on Block 12, known as "Aphrodite," shifted the discussion in Cyprus towards the island's potential as an energy hub in the region. The goal was for the Republic of Cyprus (RoC) to become independent from the fuel oil it uses for electricity generation and, in the geopolitical realm, for hydrocarbons to act as a catalyst for resolving the Cyprus problem. However, the quantities of gas from "Aphrodite" (approximately 4.3 tcf) proved insufficient for establishing a terminal at Vasilikos, which would have positioned Cyprus as a transit hub in the region. Furthermore, the explosion at Mari underscored the lack of energy security in the power grid, rendering any planning centered around Cyprus non-existent.
The Anastasiades decade (2013-2023) has been remarkably interesting in terms of energy prospects in the Eastern Mediterranean, as it has witnessed significant developments. Regarding strategic planning and public management of the deposits in the Cypriot Exclusive Economic Zone (EEZ), almost every possibility was explored: pipelines between "Leviathan" and Cyprus, export of the deposits in the Cypriot EEZ to Egypt, the grandiose EastMed pipeline connecting Eastern Mediterranean deposits to Europe through Greece, and the analysis suggesting that a pipeline to Turkey could resolve the Cyprus problem or bypass Cyprus altogether, among others. However, the realities remained. In 2014, Cyprus declared the Aphrodite field commercially viable, made progress with the discovery of smaller quantities in blocks 6 and 10, and experienced unlawful drilling by Turkey in its licensed blocks, while the discovery of the Zohr field in the Egyptian EEZ significantly altered the situation in the region. Furthermore, since 2014, the issue of a co-development agreement between the RoC and Israel for the Aphrodite and Yishai fields has been unresolved, effectively preventing the commercial exploitation of the RoC's sole field.
Twelve years later, hydrocarbons still lie untapped deep beneath the Cypriot continental shelf, and two cycles of 15-year political approaches are resurfacing with the strategic proposal of the new Christodoulides government, which the opposition AKEL party claims justifies their stance, for the creation of new projects.
"Contradiction" with ENI
The Eastmed-Poseidon pipeline for the transportation of natural gas extracted from the rich deposits of the Eastern Mediterranean to Europe, an area that still has "many untapped possibilities," requires, above all, "an agreement with Turkey," which is currently excluded from the project, stated the CEO of the Italian energy giant, ENI, Claudio Descalzi. The statement, which for many simply confirms the initial impression that the grand project is only a plan on paper, prompted a reaction from the Cypriot Ministry of Energy.
In statements to CNA, the Minister of Energy characterized Mr. Descalzi's recent statement to the Foreign Affairs Committee of the Italian Parliament that the project cannot be implemented without Turkey's consent as the opinion of a private entity. He added that there are many other companies for which this specific solution exists, just as there is a solution for the Eastern Mediterranean deposits and the solution proposed by Cyprus for liquefaction on the island and transportation by ships to European markets. "The decision on how this pipeline will be effectively implemented will be based on a techno-economic study, and while it touches on geopolitical issues, according to Mr. Descalzi's judgment, it also requires Turkey's concurring opinion, an opinion that the government does not share," he emphasized.
Strategy and Substance
Despite the two rounds of strategic approaches for the exploitation of hydrocarbons in Cyprus, what becomes clear is that both the technical infrastructure and the cost and choice of gas disposal in the region are primarily decisions of the involved companies, issues of sustainability (dependent on market demands and natural gas prices), and, to a lesser extent, matters of state choices. Illustrative examples in the region are Egypt and Israel, which have turned natural gas into tools of security and cooperation. In the case of Egypt, the relevant industry has been operating smoothly since the late 1950s (following the wars of 1967, the War of Attrition from 1967 to 1970, the 1973 war, and the normalization of relations after 1979). In the case of Israel, it involved the commitment of "Leviathan" for export purposes prior to achieving political self-sufficiency and, more recently, within the framework of the "Abraham Accords," as a tool for cooperation with Arab-Muslim states and Gulf Monarchies (with Morocco and the UAE already expanding their footprint in "Leviathan"). Naturally, both countries remained committed to a substantive strategic plan regarding what they wanted to do with their deposits.
At present, the exploitation of both the "Aphrodite" deposit and the other deposits in the Cypriot EEZ for exports and electricity generation depends on two key factors:
• The resolution of the pending issue with "Yishai" that has been ongoing since 2014 and was raised again during the Christodoulides-Netanyahu meeting.
• The interest of investors who will be invited to construct the submarine pipeline connecting "Leviathan" with Cyprus - with the interest, according to Mr. Panastasiou, being expressed by two major companies.
In the middle of next month, the Minister of Energy of the Republic of Cyprus will visit Israel in order to finalize the construction agreement. It remains to be seen whether there is also a prospect of resolving the joint exploitation agreement for "Yishai" and whether this will happen at an international level, through company-level negotiations, or through international arbitration (expert determination). Alternatively, it remains to be seen if Israel's policy in the region will revert to the period of 2014-2016, where it awaited the development of plans by other countries to determine whether it would choose exports to Europe or directly to Turkey (Note: Under the Netanyahu administration, after his election in 2015, the possibility of exporting gas from "Leviathan" to the Turkish port of Çeşme was discussed).
[This article was translated from its Greek original]