Revenue from “Aphrodite” estimated to exceed $9 billion

Cyprus’ revenues from the exploitation of the Aphrodite natural gas field are expected to exceed $9 billion over an 18-year period, based on the agreement the Republic has reached with the consortium of companies that holds the license for the Aphrodite, Energy Minister Yiorgos Lakkotrypis revealed on Wednesday after the Cabinet’s meeting.

In statements, Lakkotrypis said that negotiations with the licensees, namely Noble Energy, Shell and Delek Drilling, have been concluded, adding that they aimed to change the revenue-sharing agreement, while at the moment the two sides are discussing the development and production plan.

Once these two documents are finalised and presented to the Council of Ministers, a license will be issued to allow for the exploitation of the Aphrodite field. We believe that this is a good agreement, under the circumstances, with the companies, which will also allow the Republic of Cyprus to earn significant commercial revenues, which are estimated to be over $9 billion over an 18 year-period always based on an average oil price of $70 per barrel, he noted and spoke of very significant revenue.

Cyprus will become a gas producer, said Lakkotrypis and noted that the revised contract would contain very strict clauses regarding the implementation of what has been agreed upon. “And there are specific milestones that the companies should respect otherwise there could be very serious repercussions on the contract, he added.

Lakkotrypis explained that revenues would be fluctuating, depending on the international oil price.

On revenue sharing, he noted that any theoretical losses that may occur over the course of 18 years, which is the lifetime of the gas field, will be covered by the economic activity that will be spurred by the expenditure made. He stressed that the exploitation of the Aphrodite field would be the largest project in Cyprus, as the cost of infrastructure was estimated at $7.9 billion and part of this economic activity would pass to the local economy. Thus, the deal will have multiple benefits, both commercially, direct benefits from revenue, indirect benefits from economic activity, and geopolitical benefits as we cement our relationship with Egypt, said the Minister.

He also said that based on the development and production plan, which is now under discussion, the first quantities of natural gas should not be expected before 2024-25.

Reliable sources have told Cyprus News Agency that the agreement foresees a revenue ratio of 57% – 43% in favour of the Republic of Cyprus. The average state revenue would amount to $522 million per year and reach $9.4 billion over the course of 18 years. Cyprus’ revenues were estimated at around $200 million annually in the early years and until the consortium fully depreciated its investment in infrastructure.

Asked about the Calypso gas field in block 6 offshore Cyprus, the Minister said that it was possible that it expanded in block 7 and added that in order to have a more complete picture, it may be necessary to drill in block 7.

Source: Cyprus News Agency