The development of the Aphrodite gas field in Cyprus is facing delays due to Chevron’s extension for submitting its plan, disagreements on gas transportation, and concerns about the project’s financial viability. These complex decisions are crucial for Cyprus’ energy aspirations, with a new deadline set for March 2024, but the future of the project remains uncertain.
What is causing delays in the development of the Aphrodite gas field in Cyprus?
The Aphrodite gas field development is delayed due to Chevron’s extension for submitting its plan, disagreements on transporting gas versus a Floating Production Unit, and the project’s financial viability. Cyprus’ energy aspirations hinge on these complex decisions, with a new deadline set for March 2024.
Cyprus’ Energy Aspirations Delayed
Cyprus’ ambitions to tap into the resources of the Aphrodite gas field have hit yet another snag, as the multinational oil corporation Chevron has been granted an extension for submitting its development plan. The complexity of decisions in the energy sector is not to be understated, particularly when considering the scale of investment and the multitude of influencing factors. However, the pace at which the Aphrodite gas field project is advancing—or rather, not advancing—raises questions about when, or even if, Cyprus will be able to harness its gas reserves.
With a new deadline set for March 31, 2024, the Chevron-led joint venture, which includes NewMed Energy, must present a comprehensive strategy for the field’s development. Approval by Cyprus’ energy minister is far from a certainty, and even if it is granted, Chevron will then begin a Front-End Engineering Design (FEED) study. This step involves a deep dive into the project’s technical requirements and financial implications, paving the way for the final investment decision.
A Struggle for Control and Profitability
Chevron’s original timeline for the FEED study was slated for completion by November 2023. However, disagreements between the Cypriot government and the operator led to a formal request for postponement in December 2022. In an attempt to put a positive spin on these developments, Energy Minister Giorgos Papanastasiou, perhaps with a touch of optimism, remarked that a “win-win situation has been achieved.”
Central to the dispute is the choice between transporting gas to a liquefaction plant in Egypt and setting up a Floating Production Unit (FPU) right at the Aphrodite gas field. The latter option would ostensibly offer Cyprus more control over the marketing of the gas and possibly lead to more efficient exploitation of the reserves. Yet, the feasibility of this plan from Chevron’s perspective remains to be seen.
Financial Feasibility and Industry Implications
Cyprus faces a precarious situation with the Aphrodite gas field. The field itself is relatively small by industry standards, and the funding of the project rests on the shoulders of the operator. Should Chevron determine that investing in an FPU, which is estimated to cost around €1 billion, is not economically viable, they could abandon the project altogether—despite any incurred losses. For Cyprus, this could mean the end of the road, as other oil companies may be hesitant to pick up a project left behind by such a major industry player.
Even under the best-case scenario, where a development plan is approved, Cyprus is still looking at a lengthy timeline. Should all go according to plan, the FEED would conclude by the end of 2025, with gas extraction not starting until four years thereafter. Yet, this timeline is predicated on the absence of any further complications, both internal and external, which, in the volatile world of energy, is far from guaranteed.
1. What is causing delays in the development of the Aphrodite gas field in Cyprus?
The delays in the development of the Aphrodite gas field in Cyprus are primarily caused by Chevron’s extension for submitting its plan, disagreements on gas transportation options, and concerns about the project’s financial viability.
2. What are Cyprus’ energy aspirations and how are they being affected by the delays?
Cyprus aims to tap into the resources of the Aphrodite gas field to fulfill its energy aspirations. However, the delays in the project’s development are hindering Cyprus’ ability to harness its gas reserves and achieve its energy goals.
3. What is the main disagreement between the Cypriot government and Chevron regarding the Aphrodite gas field project?
The main disagreement between the Cypriot government and Chevron revolves around the choice of gas transportation options. The government favors transporting gas to a liquefaction plant in Egypt, while Chevron is considering setting up a Floating Production Unit (FPU) at the Aphrodite gas field for more control over gas marketing and potential efficiency gains.
4. What are the potential implications of the project’s financial feasibility on its future?
The financial feasibility of the Aphrodite gas field project is crucial for its future. If Chevron determines that investing in an FPU is not economically viable, they may abandon the project, potentially leading to the end of the project for Cyprus. This could also deter other oil companies from taking over the project, impacting Cyprus’ energy aspirations.
