After a decade of failed efforts, an informed source told Politis that a deal on the long-suffering Aphrodite-Ishai gas dispute is finally round the corner.
The same source said Cyprus and Israel are expected to sign an agreement on the issue this November, bringing to a close a chapter that has been an inconvenient thorn in increasingly strong relations between the two neighbours.
Although not a precondition for taking Aphrodite gas to market, resolution of the dispute removes certain obstacles that could delay development of Cyprus’ first gas discovery.
On September 16, Energy Minister Giorgos Papanastasiou met with his counterpart, Energy and Infrastructure Minister Eli Cohen in Israel to discuss the ongoing Aphrodite-Ishai gas dispute and the Great Sea Interconnector (GSI) project.
Within touching distance of a deal
According to the source, the two ministers would have signed an Intergovernmental Agreement (IGA) to finally end the dispute once and for all during Papanastasiou’s visit, but a hold up on the Cypriot side prevented the deal from being sealed.
Cyprus delayed in providing feedback on the latest draft of the IGA, preventing the signing from taking place. Instead, the Israeli minister is expected to visit Cyprus in November to sign the agreement, pending resolution at the political level of a number of minor pending issues, said the source.
While the Cypriot side sees the light at the end of the tunnel, another source on the Israeli side was less than confident that a deal could be reached by November.
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, a small part of which is believed to extend into Israeli waters.
Israel declared the gas falling on its side – Ishai – a ‘commercial discovery’ in 2015, signalling the state’s intention, along with Ishai’s commercial partners, to secure their claimed share of the extended Aphrodite find.
The question of how much exactly falls into Israeli waters has been the subject of debate ever since. Over the years, as the relationship between Cyprus and Israel grew, respective leaders of the two countries expressed their intention to find a solution.
Negotiations were launched again in 2022 to either 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.
The Cypriot side insists that resolution of the dispute is not a precondition to the commercial development of Aphrodite. However, Cyprus does not want to remain in a dispute that might create geopolitical problems with a neighbouring country.
How much of the Cypriot gas discovery belongs to Israel?
According to one informed source, negotiations were fast-tracked in the last year and a half, achieving significant progress. The question of joint development is off the table. A unitisation agreement that would regulate future gas finds on the shared maritime border between Cyprus and Israel is not on the cards either. Agreement now depends on calculating how much of the Aphrodite gas field extends to the Ishai reservoir and what is it worth. Although the two countries are negotiating the method of resolution, it is unlikely any agremeent would be reached without the tacit acceptance of the commercial partners on either side of the maritime boundary.
Cyprus and Israel have agreed to sign an Intergovernmental Agreement where, according to sources, the level of compensation to be paid to the Ishai partners will be determined by expert opinion, based on an agreed methodology. The expert’s decision will be final and binding on the Ishai and Aphrodite commercial partners, as well as on Cyprus and Israel.
When will Aphrodite partners take final decision on gas?
An agreement in November would be a good omen for the development of Aphrodite gas to finally take off. Aphrodite’s current owners, Chevron (35% stake), Shell (35%) and NewMed Energy (30%) agreed with Cyprus on new milestones in an updated Development Plan in February 2025.
The next milestone, according to respected energy publication MEES, is for Chevron to launch a multi-million dollar Front-End Engineering Design (FEED) on development of Aphrodite by November 2025.
Cyprus may hope for Aphrodite partners to take a Final Investment Decision (FID) on developing Aphrodite within 2026. However, according to NewMed’s February 15, 2025, statement, an FID will be taken in 2027 – subject to numerous factors including “the finalization of financing arrangements” – with a view to gas deliveries starting in 2031.
It remains to be seen whether the two regional partners, Cyprus and Israel, can finally put this issue to bed, and how the Aphrodite commercial partners will proceed either way.