Cyprus is trying to provide a hand as Europe works to find alternatives to natural gas supplied by Russia. The new area in the Mediterranean is thought to have about 4.4 trillion cubic feet of gas. Natasa Pilides, the energy minister of Cyprus, told Bloomberg this week that Europe is the most likely place for the gas that hasn’t been used yet.
The European Union’s rush to find alternatives to Russian natural gas has put the spotlight on different gas producers in both well-known and new producing regions. Gas exploration has been made a top priority in Cyprus. The small Mediterranean island nation is new to the gas business. It started in 2011 when gas was found in the Aphrodite offshore field, which is thought to hold about 4.4 trillion cubic feet of gas.
The Aphrodite field is run by Chevron, Shell, and an Israeli company called NewMed Energy. There will soon be one more exploration well, and by the end of the year, Chevron will give the Cypriot government its final plan for developing the field.
Natasa Pilides, the energy minister of Cyprus, told Bloomberg this week that Europe is the most likely place for the gas that hasn’t been used yet. The country uses a lot more gas than it can produce, and Europe, which is close by and has a lot of cars, is a thirsty market.
“Europe is a good possible customer for Cypriot gas because the EU has said that natural gas will remain a bridge fuel until 2049 as part of the green transition,” Pilides told Bloomberg. “This gives companies the peace of mind that they can sign long-term contracts.”
The official also said that the European Union plans to stay away from Russian gas once the war in Ukraine is over. This would be good for gas suppliers on the continent who don’t come from Russia. The field of Aphrodite is not the only one. This year, France’s TotalEnergies and Italy’s Eni started drilling for gas in an offshore block where a possible big find was made a few years ago.
Block 2 has the Glaucus-2 appraisal well. In 2019, it was estimated that the resources in place were worth between 5 and 8 trillion cubic feet. Exxon and Qatar Petroleum worked together to find the Glaucus field. Now, two of the biggest oil companies in Europe are drilling there again. Eni and TotalEnergies found the Calypso field in Cyprus. It has resources that are similar to what is thought to be in the Glaucus field. But the process of Cyprus becoming a major regional gas hub has lagged behind changes in demand and supply.
A report from Reuters in 2020 says that the development of the Aphrodite field has been put off because the partners who run it are renegotiating their production sharing agreement with the Cypriot government.
At Glaucus, the problem seems to have been that Exxon didn’t have enough resources to carry out its plans for the field.
“There isn’t much room in local markets and the export infrastructure we already have. And the amount isn’t enough for ExxonMobil and its partner Qatar Petroleum to feed a two-train LNG plant, which was the goal of the partnership, a senior analyst at Wood Mac told Reuters in 2020.
Things have definitely changed since then. Even though Cyprus doesn’t have a lot of infrastructure, the demand for gas that doesn’t come from Russia has risen so quickly that it may have changed the economic case for Cypriot gas.
There are still problems, though. Turkey, for one, doesn’t like how Cyprus is developing its gas resources, which Ankara says don’t belong to Cyprus to develop. The long-running dispute between Turkey and Cyprus over land is kind of like a headache for Cyprus.
There is also the issue of the infrastructure for exports. The company that runs the Israeli offshore fields, Energean, is thinking about building a pipeline from the fields to Cyprus. This pipeline would then connect to a floating LNG production vessel that would use both Israeli and Cypriot gas.
Cyprus won’t start making gas from all of these big gas finds for a few more years. For example, the Aphrodite field is expected to produce its first gas in 2027. In 2026, the Energean pipeline could be done. Europe will have to make do with what it can get from other places until then.
