Egypt Eyeing Tamar and Aphrodite
Noble Energy will soon announce the Aphrodite field commercially viable. The field was discovered by the Texan company in Block 12 of Cyprus’ Exclusive Economic Zone in 2011 and is estimated to hold 4.54 Tcf. The Cypriot government was originally planning the construction of an onshore LNG terminal on the Vassilikos coast to export its offshore hydrocarbon. However, such undertaking requires large investments and given that no other discovery was made in Cypriot waters, the island is now exploring alternative (and cheaper) options for the commercialisation of its offshore riches. Cyprus Hydrocarbon Company recently signed an MOU with Egypt’s natural gas holding company to begin talks to export Cypriot gas via an undersea pipeline to Egypt.
Exporting the gas to Egypt will allow the development of Cyprus’ offshore field. Cyprus could also use Egypt’s unused export terminals to reach far-reaching markets. Egypt is looking for regional suppliers of natural gas as it is undergoing a severe energy crisis at home due to a flat production and ongoing export obligations. Cyprus is not the only potential supplier. Israel too could provide Egypt with the needed gas. Egypt was once Israel’s main natural gas supplier and the two countries are not engaged in talks to enter a gas deal, but this time the gas will flow in the opposite direction, from Israel to Egypt.
According to a press release published by Israel’s Delek Drilling, one of the partners to the Tamar field, a letter intent to export natural gas from the Tamar field to Egypt was signed with Dolphinus Holdings Limited. According to the agreement, the volume of natural gas that will be exported is expected to be based on the volume of surplus gas available to the Tamar Partners from the Tamar Project, on an interruptible basis, over a period of 7 years. The contract provides that the Tamar Partners will offer to supply the Buyer a minimum cumulative volume of 5 BCM for the first 3 years of the contract, subject to the daily limit of up to 250,000 MMBtu per day.
Egypt’s role is increasingly important in the region, not only as a potential customer for East Med gas but also as a route to reach lucrative markets. Cyprus’ change of priorities, the LNG option being off the agenda in the near future and Israel’s opting for a pipeline strategy have put Egypt in a strategic position. It is yet unclear whether Cypriot or Israeli gas will reach Egypt first, but given that Israel is already producing gas from the Tamar field, and despite the regulatory hurdles that may impede regional deals, it is expected that Israeli gas will be delivered to the Egyptian neighbour before the development of Aphrodite.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. 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