CNA News

Chevron President in Cyprus as deadline over Aphrodite development plan expires

Clay Neff, Chevron’s president for Africa and Latin America Exploration and Production, will visit Cyprus on Friday, just a few days before the expiration of the deadline for negotiations with the Cypriot government on the dispute over the revised development plan of the Aphrodite gas field, estimated to carry around 4.4 trillion cubic feet of natural gas.

Sources told CNA that Neff will meet with President Nikos Christodoulides and Energy Minister George Papanastasiou, with market participants saying the energy giant’s high-ranking official will request a new extension to the consultation period which expires on November 5 with a view to finding a solution to the dispute.

The Aphrodite consortium of Chevron Corp, Shell Plc and Israel’s Newmed Energy LP have submitted a revised development plan which features significant cost-cutting adjustments compared with the initial development plan submitted in 2019 by Noble Energy, the then operator of the field. The plan was rejected by the Cypriot government in late August allowing for 30 days of consultations to settle the dispute. The period was extended for an additional thirty days and expires the coming Sunday.

The FPU at the core of the disagreement

According to well-informed sources, the cancellation of a floating production unit (FPU) is at the core of the disagreement with the consortium now proposing that the gas will enter a 480-kilometre pipeline bound for Idku LNG terminal in Egypt.

Moreover, the new plan features three production wells instead of the previous five, believed to result in reduced gas production. Estimates suggest that the new revised development plan features significant cost reduction for the consortium mainly driven by the removal of the FPU. The capital expenditure of the 2019 plan was estimated at $3.6 billion.

The Cypriot government believes that the FPU would extend the reservoir’s lifespan optimising gas production, whereas its removal would signify reduced gas recovery and consequently reduced revenues, while such infrastructure would provide flexibility in the operation of the gas reservoir.

As the deadline over the settlement of the dispute with Chevron is rapidly approaching, Papanastsaiou said last Tuesday that Cyprus believes that energy autonomy is not obtained only with reserves but with gas infrastructure as well.

“This is our goal, which is why we insist on infrastructure,” he said.