First production licence set to be issued for Cyprus EEZ

The Council of Ministers is expected issue exploitation licences for the Aphrodite field, Energy Minister Giorgos Lakkotrypis said on Sunday.

As far as the Aphrodite field is concerned he said, “we are in negotiations with the consortium to come up with a jointly acceptable plan for development and production, which must be submitted to the Council of Ministers to issue production licences for the Aphrodite field, marking the first time that such licences will be issued for the Cyprus EEZ (Excusive Economic Zone)”.

This is the third type of licence that is issued to interested companies. The first, a prospecting licence allows the geological evaluation of an area, while the second, an exploration licence allows for exploratory drilling to take place. If a discovery is made, the licensee then has the right be granted an exploitation licence.

Exploitation licences are granted for an initial period of up to 25 years with the option of one renewal of up to 10 years. Successful applicants must enter into an exploration and production sharing contract (EPSC) with the government.

A production-sharing deal for the Aphrodite gas reservoir worth over $9 billon (€7.9bn) over 18 years was struck by the government with Noble Energy and its partners last month.

Lakkotrypis said negotiations finished with Cyprus getting a good deal under the circumstances that is worth over $9bn or around $500 million (€443m) per year over 18 years, depending on the international price of oil.

The consortium’s investment would consist of an extraction platform at the site of the well, plus a pipeline running from the reservoir to Egypt’s shores.

The minister said the effort is to extract, if not all, most of the reserve in the Aphrodite field so that its exploitation would be viable.

Based on the plan, the first gas is expected around 2025.

The energy minister said this would be the biggest infrastructure project ever undertaken in the Republic of Cyprus, worth some $7.9bn.

Source: Cyprus Mail