Energy Minister Giorgos Papanastasiou met with his counterpart, Energy and Infrastructure Minister Eli Cohen on Tuesday in Israel to discuss the Great Sea Interconnector (GSI) project and the ongoing Aphrodite-Ishai gas find dispute.
According to a translation of the Israeli Energy Ministry press release, Cohen said after the meeting: "We are strengthening our status as a regional energy powerhouse, and are turning Israel into an energy bridge from East to West."
Israel considers GSI project of 'strategic importance'
He added: "The submarine power cable project, which will connect Israel to Europe via Cyprus, is an important project that will help diversify Europe's energy sources, and will allow the State of Israel to receive backup from European power grids in times of emergency. Together with my colleague the Cypriot Minister of Energy, we will continue to strengthen cooperation for the benefit of the interests of both countries."
Papanastasiou and Cohen agreed to continue promoting the submarine power cable project. According to the Israeli ministry, the project is of strategic importance for Israel. It will allow Europe to diversify its energy sources and contribute to increasing Israel's energy security.
The project also represents a realization of the vision of creating an infrastructure and energy corridor that will connect the East to the West through the Gulf States and Israel, as part of the expansion of the Abraham Accords, noted the press release.
A great deal of doubt has been injected into the likelihood of the GSI project’s completion recently. While both Greece, Cyprus and the EU, highlight the strategic importance of the project with regard to energy security and supply, Finance Minister Makis Keravnos seemed to put a spanner in the works when he raised doubts as to its financial cost and feasibility. It also transpired that the European Public Prosecutor’s Office (EPPO) is investigating the project.
The situation became more precarious when Greek Prime Minister Kyriacos Mitsotakis called on Cyprus to pay a €25 million instalment, one of five pending to Greece’s Independent Power Transmission Operator (ADMIE), the project’s promoter. Friction between the two countries has subsided in recent days, as have the media headlines on the stalled project.
It remains to be seen whether Papanastasiou simply gave his counterpart an update on developments or is seeking greater Israeli involvement to ensure completion of the project.
Can the two countries find a golden formula on Aphrodite?
The ministers also discussed a pending agreement on the Aphrodite-Ishai natural gas reservoir, which is located in the economic waters of Cyprus and Israel.
According to Israel, such an agreement "will strengthen Israel's status as a regional energy power".
According to one industry analyst, the issue of Israel’s share in Aphrodite is likely to gain more traction in the coming weeks as a resolution could be vital to helping progress the gas find’s development.
Aphrodite, discovered in 2011, is estimated to contain 3.5 trillion cubic feet of recoverable gas, enough to meet Cyprus’ gas needs for a century. The reservoir was found just a few kilometres from the maritime border with Israel, and a small part of it is believed to extend into the Israeli exclusive economic zone.
When Israel declared ‘Ishai’, the part of the reservoir falling on its side, a commercial discovery in 2015, it signalled its intention, along with Ishai’s commercial partners, to secure their claimed share of the Aphrodite find.
The question of how much exactly falls into Israeli waters has been the subject of debate for a decade now.
The two governments have often voiced their intention to move forward on an interstate agreement to regulate this issue but this has yet to materialise. More focused negotiations were launched in 2022 to work on a unitisation agreement that would govern the development of joint finds or on some other mechanism that would allow exploitation of the Aphrodite-Ishai gas to progress.
Basic principles were agreed that would encourage the commercial partners on each side to reach agreement on compensation, in parallel with an intergovernmental agreement between Cyprus and Israel. In 2023, a working group was set up to conclude on the latter.
However, neither the commercial partners nor the two governments have announced any agreement to date. It remains unclear where the holdup is exactly, on the government or commercial side.
Whatever the case, this raises the question, if agreement cannot be reached on Israel’s exact share, will it be taken for arbitration and when? And, ultimately, who will pay?
New milestone approaches
Following repeated delays, Aphrodite’s current stakeholders, Chevron (with a 35% stake), Shell (35%) and NewMed Energy (30%) have new milestones to meet.
Chevron bought Noble in 2020 and is lead operator on the gas discovery. The energy giant was due to launch a Front-End Engineering Design (FEED) study on development of Aphrodite in November 2023. That deadline got pushed back to November 2025, with a view to making a Final Investment Decision (FID) on exploitation of the gas in December 2026.
The question raised is whether the unresolved Ishai issue will become an obstacle to progress, leading to further delays in developing the Aphrodite gas field, or whether it will be resolved, clearing the path towards a Final Investment Decision and the belated development of Cyprus’ first gas discovery.
