Israeli minister in Nicosia as gas bargain heats up

Israeli Energy Minister Karine Elharrar is visiting Cyprus on Monday to talk gas directly with her Cypriot counterpart, after companies tasked by the two governments to negotiate a joint reservoir failed to agree on a buyout deal.

According to the Cyprus News Agency, Elharrar was scheduled to be in Nicosia on Monday to discuss an ongoing dispute over the Aphrodite-Yishai natural gas reservoir that crosses the maritime territory claimed by both Israel and Cyprus.

The visit comes after Israeli media suggested Elharrar was not fully on board with statements Cypriot Energy Minister Natasa Pilides had made to Bloomberg in an interview over the summer.

In July Pilides pre-announced “a realistic date for production” would be made known before the year is out, while Chevron, which acquired Aphrodite stakes from Texas-based Noble Energy, said it was acting in coordination with the Cypriot government.

Elharrar, who is known for switching gears towards renewable energy, has not publicly commented on the issue.

But six months ago Elharrar reportedly warned companies in Israel that their time was running out in negotiations with firms licensed by the Republic of Cyprus over the shared gas deposit where Israel claims 10%.

Pilides told CNA Monday’s visit was taking place “in the context of our established dialogue on Yishai.”

Since 2010, Nicosia has been pitching the idea for the Israeli government to waive its rights on the Yishai side of the joint reservoir, located about 100 miles west of Haifa, in exchange for compensation.

But after a prolonged discussion, statements attributed to Elharrar in February 2022 suggested the Israeli minister favored the states stepping in to put an end to endless talks between the two neighbors.

Local media have been speculating over the weekend that Elharrar was coming to Cyprus to discuss compensation for the 10%.

Price of 10% easier said than done

But this could be easier said than done, as companies have failed over the years to agree on a price after Elharrar’s predecessor and Nicosia called on the companies to come up with a formula for Israeli companies to be compensated.

Although never officially stated, reports last year said the Israeli partners preferred joint development with Aphrodite partners Chevron, Shell and Delek, instead of a buyout in the form of a one-time compensation payment.

Pilides says she and Israel’s former energy minister had agreed on a framework to resolve the issue, adding that guidelines for negotiations had been passed on to the companies involved in the project.

Earlier this year a bizarre development took hold in Israel after it emerged that stakeholders accused the former government of allowing Nicosia and the Aphrodite partners to take steps towards development of the reservoir while openly ignoring the rights of Israel and the Yishai prospect in the reservoir.

Both countries are facing elections, with Israelis heading to the polls in November to elect the new Knesset, while Cypriots will elect the next president in February 2023.