Delek to Purchase More Shares in Aphrodite
In an announcement made on 1 June 2015, Israel’s Delek announced it had begun preliminary negotiations with Texan Noble Energy for the acquisition of 19.9% of its share in Block 12 of Cyprus’ Exclusive Economic Zone. Aphrodite, discovered in 2011 by Noble, is operated by the Texan company, holding 70% of the shares in the field. Delek Drilling and Avner Oil Exploration hold 15% of the rights each. The negotiations are still at their early stages and a final deal will require final regulatory approvals by the competent authorities.
Estimated at 4.54 Tcf of natural gas. Aphrodite is the only field discovered to date in Cypriot waters. The monetization of the offshore riches will ensure the island's natural gas independence and will enable Cyprus’ entry into the natural gas export market. Future gas revenues will also consitute a significant boost to Cyprus' ailing economy severely hit by a financial crisis in spring of 2013. Potential customers for Cypriot gas include neighbouring Jordan and Egypt, both in severe need for the hydrocarbon. Cyprus would export its natural gas via pipeline, with a possibility of using Egypt’s unused export terminals to reach far-reaching markets.
Cyprus’ original plan to build its own onshore LNG terminal on its vassilikos coast did not materialise due to the island’s failure to make additional discoveries that would justify the commercial viability of the multi-billion dollar project. The Italian-South Korean consortium ENI-KOGAS faced two dry holes while drilling in Block 9 of the island’s EEZ. French giant TOTAL, licensed for drilling in Block 10 of the island’s waters, expressed it was reconsidering its presence offshore the island for not having identified “drillable prospects”.
Cyprus’ exploration activities spurred the discontent of the Turkish government opposed to “unilateral drilling” by the Greek Cypriots claiming it violates the rights of the Turkish Cypriots living in the northern third of the island, despite repeated statements by the government of Cyprus confirming gas explorations would benefit all of Cyprus, both communities included. The government of Turkey sent in October 2014 a seismic vessel to conduct exploratory searches in the island’s maritime zone already licensed to multinational companies.
UN-led peace talks to put an end to the division of Cyprus have now resumed and are being conducted by President Nicos Anastasiades and his Turkish Cypriot newly elected counterpart. Natural gas is likely to be an important element of the discussion amid plans to commercialise Aphrodite and issue a development plan for the field.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat