Energy partners in Cyprus’ offshore natural gas field Cronos took a “decisive step” towards monetising Cyprus’ first gas development on Monday, signing contracts worth up to $1.8 billion that will officially kickstart the project’s ‘execution phase’.
According to Italian giant Eni, operator of the Cronos field, Eni signed the main engineering, procurement, construction and drilling contracts for the development of the Cronos project, marking “a key milestone towards the monetization of Cyprus' first gas development”.
This comes after Eni, in partnership with French major TotalEnergies, took a Final Investment Decision (FID) last July on development of the over 3tcf (trillion cubic feet) Cronos reservoir, discovered in Block 6 of Cyprus’ Exclusive Economic Zone (EEZ) in August 2022.
The execution phase of the project was formally launched at the Presidential Palace in Nicosia on Monday during a ceremony attended by President Nikos Christodoulides, Energy Minister Michael Damianos and Eni Chief Operating Officer Global Natural Resources Guido Brusco.
First-time gas producer
According to Eni, “the project is expected to reach a production plateau of up to 500 million standard cubic feet per day (mmscf/d),” with Cyprus expected to become a first-time gas producer in the first half of 2028.
The Cronos partners intend to leverage existing infrastructure in the region, connecting Cronos to a processing facility at Egypt’s offshore reservoir Zohr via a 110km subsea pipeline, from where it will be sent for liquefaction to the Damietta LNG plant in Egypt and then exported to international markets, primarily Europe.
$1.8 billion in contracts
In a written statement, President Christodoulides said: “The signing of contracts worth up to $1.8 billion for the development of the Cronos field” constituted “a decisive step towards the exploitation of our country’s natural wealth”.
It will also mark the first commercial exploitation of Cypriot natural gas since the first hydrocarbons discovery in Cyprus’ EEZ was made in 2011, revealing the 3.7tcf Aphrodite reservoir.
Christodoulides hailed the step as representing “a strong vote of confidence in our country’s energy prospects, carrying particular geopolitical and economic significance”.
Speed, cost, value and profit
Industry specialist MEES has reported that Eni’s target is for first gas to go to market specifically by March 2028. Use of existing infrastructure allows for a “fast-track” development that reduces the up-front investment required, but MEES writes, it also means field partners have to pay for transportation to Egypt, processing at Zohr and liquefaction at Damietta.
Quoting Energy Minister Damianos, the publication noted that the government’s assessment is that despite the costs, Cronos still creates value for the country.
“For Nicosia, the calculation is that getting Cronos into production and establishing Cyprus as a gas producer outweighs the costs and risks inherent in the Egyptian route,” reported MEES.
Aphrodite dispute
Regarding Aphrodite’s development in Block 12 of Cyprus’ EEZ, the government is currently in negotiations with field operator Chevron on the pipeline tariff that will transport gas through Egyptian waters and then connect it to Egypt’s national gas grid. The sides are reportedly discussing Chevron’s proposal for a threefold increase in the tariff. It is not yet clear what impact the current dispute will have on the signing of a Gas Sales Agreement for Aphrodite and on Chevron’s timeline to complete its Front-End Engineering Design (FEED) by December-January and take FID within 2027, with the aim of achieving first gas by 2031.
Cypriot gas to Cyprus?
Meanwhile, it remains to be seen if and when Cypriot gas will be transported back to the island for use in power generation. As things stand, Cyprus will not be in a position to receive liquified natural gas at Vasilikos in the first half of 2028 when Eni and partners are expected to start LNG exports of Cronos gas.
Regarding the potential export route of the Glaucus and Pegasus discoveries in Cyprus' Block 10, MEES East Med Editor Peter Stevenson told Politis: "My understanding is ExxonMobil and QatarEnergy are pushing for Egypt as it offers the quickest route to monetization. Cyprus is trying to convince them that an FLNG (floating liquefied natural gas) solution is preferable, but I don't believe the partners are overly keen though an official decision has not been taken."
