Cyprus is likely to join Egypt and Israel as a key player in the Eastern Mediterranean area now that the pipeline from the Aphrodite field to Egypt has become a tangible reality. This turnout is expected to trigger further exploration activity by operators in the country and Cyprus can see a substantial investment in upstream natural gas developments in the near future.
Delek Energy, a key stakeholder, has also proposed a partnership in the export pipeline to potentially secure an additional export route for its Leviathan field in Israel placing even greater focus on Cyprus’ role in the gas sector.
Despite the offshore oil and gas industry in Cyprus having no producing fields, there have recently been significant activities that could trigger first development of gas reserves. Two major gas discoveries in the country are Aphrodite, discovered in 2011 with an estimated 4,000bcf to 5,000bcf, and Calypso, discovered in 2018 with an estimated 6,000bcf to 8,000bcf of recoverable volumes though appraisal activities have yet to take place.
Cyprus had three offshore licensing rounds, between 2008, 2012 and 2016 and there are twelve offshore blocks delineated. Companies awarded with licenses and operating in the country are Eni partnering with Total, the partnership Noble, Delek Energy, Shell, and the partnership ExxonMobil with Qatar Petroleum. A total of six exploration and appraisal wells were drilled since 2011. In the summer of 2018, the consortium ExxonMobil and Qatar Petroleum are expected to drill two exploratory wells in its block 10 license.
Cyprus is now in a position to approve the development of Aphrodite which will bring further activity to the Eastern Mediterranean area and provide the country with much-desired energy revenue. In comparison to neighbouring gas fields in the region, GlobalData estimates the Aphrodite field situating on the mid-range to conservative side for economics with an internal rate of return (IRR) of 16% and a break-even gas price of US$4.17 per thousand cubic feet.