Cyprus rejected updated ‘Aphrodite’ development plan, says G. Papanastasiou – The ‘Aphrodite’ field was discovered in 2011 and is estimated to hold 4.4 trillion barrels of natural gas
THE Cyprus refused the plan filed by joint venture led by Chevron Corp to develop the field “Aphrodite“, said the Minister of Energy Giorgos Papanastasiou to the Bloomberg agency and the specialized website MEES.
The parties involved will now “enter into discussions to reach an agreement in a period of 30 days,” Mr. Papanastasiou told Bloomberg News, without however mentioning the reasons for rejecting the plan.
The period of a new round of negotiations began yesterday Friday, the agency notes.
THE Chevron consortium together with Shell Plc and Israel’s Newmed Energy LP have submitted for approval an updated “Aphrodite” development plan to the Government, which provides for the connection of the field with liquefaction infrastructure in Egypt via a subsea pipeline, as NewMed had stated last May Energy.
According to Chevron, the updated plan is expected to reduce development costs and accelerate the start of production.
The “Aphrodite” deposit was discovered in 2011 and is estimated to hold 4.4 trillion cubic meters (125 billion cubic meters) of natural gas and is located near Israel’s Leviathan field, which is jointly operated by Chevron and NewMed.
MEES: Fewer production wells, floating unit removed
In the meantime, in statements on the MEES website, Mr. Papanastasiou stated that its decisions Government “They are not swayed by sentiment and are not a tactic against Chevron and its partners.”
“The main cause for our reservations it is found in the technical adjustments of the development plan. These changes appear to significantly favor Chevron while ignoring our perceptions of the potential long-term risks to Aphrodite from a Cypriot perspective,” he said.
And according to MEES, the most important technical adjustments of the plan, compared to the 2019 counterpart, limit the production wells from five to three, resulting in a reduction of production from 800 cfd to 650 cfd, significantly limiting capital expenditures (Capex ) compared to the estimated cost of $3.6 billion in the 2019 plan.
THE greater savings will come from the cancellation of the plan for a floating production unit (FPU) to process the gas before it enters a 480km pipeline linking the field to the termination in Indkou, Egypt.
According to MEES, Nicosia considers that the presence of the floating unit would extend the life cycle of the field by optimizing production, while it will mean lower recovery quantities and consequently less revenue.
“Our main concern is that the reduction of production wells to three and the absence of the FPU leaves serious questions about how much gas Aphrodite will be able to produce during the second half of the field’s life cycle when Cyprus will receive the potential rights /income”, explained Mr. Papanastasiou.
MEES notes that for Chevron, the adjustments to the development plan are clearly intended to limit the high cost of developing the field, while the CEO of the American giant, Mike Wirth, had indicated that the revision “was a capital-efficient way to bring the gas to the market”.
However, Mr. Papanastasiou stated that Cyprus is aware of the sensitive balances in the gas market, to underline that the commitment of an “Egypt-centric development plan must respect the 2019 plan” and adds: “We cannot leave the reduction measures of Chevron’s costs to limit the terms that secure our interests.”
“Our position remains firm: Our commitment is to the 2019 PSC,” he adds. They expect the ‘Aphrodite’ consortium to honor this agreement, while any deviation should ideally strengthen the existing development plan in cooperation with us, says the Minister of Energy in conclusion.
Source: KYPE
