The construction of a floating production unit (FPU) in Cyprus’ natural gas field Aphrodite is necessary for its development, Energy Minister George Papanastasiou said on Tuesday during a meeting of the House energy committee.
Chevron, the operators of the Aphrodite gas field off the coast of Cyprus, has until March 31, 2024 to submit its updated production and development plan for the field, the minister told MPs.
Papanastasiou also clarified that a few days ago an arrangement was made with the company and not an agreement.
According to the minister, in the arrangement the companies accepted that the Cyprus rejection of the revised plan they had previously submitted to the government.
“At the moment what is being discussed is that the FPU is necessary and also because from 2019 until now the energy situation in the eastern Mediterranean has changed a lot both geopolitically and energy-wise itself we thought it right that perhaps we should also accept an update of the specific plan,” he said.
He clarified that updating means that the plan is more functional in the current energy environment of the eastern Mediterranean and in the environment of Cyprus’ exclusive economic zone (EEZ).
The Aphrodite consortium consists of Chevron Corp with a 35 per cent share (operator), BG Cyprus (Shell) and NewMed with a 30 per cent share each.
Papanastasiou said that he believed March 31 would be enough time to have the companies submit an updated plan, which should contain the FPU.
In August, the government rejected a revised plan submitted by the companies in May.
The main points of disagreement in that plan included the construction or not of an FPU at Aphrodite, the construction of three instead of originally five production wells, and the timeline for delivery of the Feed (Front-End Engineering Design).
Papanastasiou said that after the processing of the original proposal by the government’s advisers and the Cyprus Hydrocarbons Company (Eyk), it was considered that there is a big risk and it left uncertainties both financially and in terms of recovering quantities of natural gas.
He added that there was a serious possibility that the flow of natural gas would have been reduced at the time, while there was also the possibility that water would enter the pipeline.
For this reason, as he said, the amendment to the development plan was rejected.
Over the weekend, and in a filing to the Tel Aviv stock exchange, Israeli firm NewMed Energy said that on December 8 Cyprus’ energy minister “authorised the operator to submit for his approval, by March 31, 2024, a proposal for an optimal development plan, such that if the minister approves it, the date for compliance with the milestone will be postponed at the minister’s discretion”.
The “milestone” refers to the cutoff date by which the joint venture is supposed to commence the Feed study for Aphrodite, as agreed under the original development plan of 2019.
Under the 2019 production sharing contract, the companies were supposed to commence the Feed study by November 7, 2023.
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