Cyprus Minister of Energy: Exploration & drilling activities to resume end of 2021

Natasa Pilides, minister for energy, commerce and industry, has gave to the Cyprus Mail an update on energy developments in Cyprus.

Q:When do you expect resumption of exploration and drilling activities in Cyprus EEZ? Are all international oil companies (IOCs) expected to resume their obligations this year? What happens if any IOCs do not stick to the timetables envisaged in their production sharing contracts (PSCs)? What can Cyprus do to ensure these are followed?

A: As you very correctly note, all operators are acting under the provisions of the production sharing contracts (PSCs) they have entered into with the Republic of Cyprus. All operators in Cyprus’s EEZ are planning to continue exploration and drilling activities in the 4th quarter of 2021 and within the timelines set out in the PSCs. In this regard, our Ministry has designed, in collaboration with the Ministry of Health and the Shipping Deputy Ministry, a protocol for people involved in such activities, whether it be crew working on drilling platforms or persons working onshore. The Contracts signed by our licensees provide for steps that the Republic can take to ensure that timeframes and obligations are followed, but also allow for a certain degree of flexibility when needed, in order to mitigate any risks that may arise. Our aim is to work with the operators in close collaboration to ensure progression of the projects in a way that benefits all parties.

Agreement with Israel

Q: The agreement of a framework with Israel to settle the Aphrodite/Ishai unitization dispute is a positive development. What are the next steps and by when do you expect agreement to be reached?

A: Indeed, the joint proposal to the Aphrodite and Ishai licensees, signed by my colleague the Energy Minister of Israel and myself, is a positive development which provides a flexible yet defined framework for the licensees’ discussions, including specific timelines and expert participation, if needed. A joint letter has been sent to the licensees, who have since been in touch with each other in order to commence the discussions. The letter proposes a 6-month period of discussions with the aim of reaching an agreement based on the available technical data that resulted from the wells drilled in both EEZs. If said discussions do not reach a conclusion in the set timeframe, the companies should make use of an expert consultant in order to resolve any remaining issues. At the end of the day, any agreement between the companies will be subject to approval by the two Governments.

Q: With this out of the way, how are the negotiations to sell Aphrodite gas to Idku progressing? Are these going to plan and do you still expect exports to start by 2025? If not, what other plans are you considering to monetize Aphrodite?

A: The development of the “Aphrodite” field is based on the agreed and approved Development and Production Plan that provides for a specific timeframe. The field’s consortium is now in the process of conducting the necessary appraisal work and technical studies, which together with international gas prices and prevailing conditions in the oil and gas industry, will lead to the eventual Financial Investment Decision. To facilitate their work, we have agreed with the Egyptian Petroleum Minister, during our bilateral meeting held on the sidelines of the recent EMGF meeting, to activate the joint technical working group provided by our pertinent intergovernmental agreement and tasked to go over the details of the construction of the gas pipeline from “Aphrodite” to the Idku LNG Plant.