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Cyprus has struck a production-sharing deal for the Aphrodite gas reservoir worth over $9bn (€7.9bn) over 18 years with Noble Energy and its partners, it was announced on Wednesday.

Energy Minister Giorgos Lakkotrypis said negotiations have finished with Cyprus getting a good deal under the circumstances that is worth over $9bn or around $500m (€443m) per year over 18 years, depending on the international price of oil. The revenues are based on an average price of oil of $70 per barrel.

Speaking after the cabinet meeting on Wednesday, Lakkotrypis said the parties were now at the stage of discussing the development and production plan.

Following that, the cabinet will be presented with two documents and will issue an exploitation permit.

“We had examined three scenarios, $60, $70, and $80 [per barrel]. Cyprus will become a natural gas producer and will also have a revised contract with very strict terms as regards the implementation of what has been agreed,” the minister said.

Specific milestones have been set that companies must respect or there would be serious consequences, he added.

Lakkotrypis said the revenues under the $70/barrel scenario will be variable “and will depend on the international price of oil. The figures I am referring to are the ones included in the intermediate scenario, which will possibly be the one that prevails.”

The talks began last summer, when the consortium telegraphed that it was not satisfied with the revenue-sharing deal in place.

The companies had struck a preliminary agreement to sell the Aphrodite gas – some 4 trillion cubic feet – to a liquefaction facility in Egypt.

However due to low oil and gas prices, the Aphrodite consortium believed the returns on their investment were unsatisfactory, and sought to renegotiate the revenue-sharing agreement with the Cypriot state.

The consortium’s investment would consist of an extraction platform at the site of the well, plus a pipeline running from the reservoir to Egypt’s shores.

Source: Stockwatch