Cyprus, Egypt, Set to Sign Gas Pipeline Deal

FILE - Cyprus’ Energy Minister Yiorgos Lakkotrypis (L) and Egypt’s Petroleum Minister Tarek el-Molla speak to the media. (AP Photo/Petros Karadjias)

Cyprus and Egypt are reportedly on the verge of closing an agreement over terms of an underwater gas pipeline between the countries that would bring fuel from Cyprus’ Aphrodite field onto Egyptian shores and then to a Liquefied Natural Gas (LNG) facility in Idku.

The agreement could be signed this week, the Cyprus Mail said, to wrap up an inter-country gas export-import pact.
Energy minister Yiorgos Lakkotrypis will be signing the deal with his Egyptian counterpart Tarek El-Molla, most likely in the Cypriot divided Capital of Nicosia.

The agreement merely facilitates the pipeline crossing maritime zones of the countries, energy analyst Charles Ellinas told the paper. “It’s not a commercial deal, it’s a political deal,” he stressed.

“The agreement covers legal, tax, regulatory and environmental issues between the two countries for a pipeline project. Pipeline standards and specifications in Egypt may be different to those in Cyprus. Or taxation, since this is effectively an export-import deal,” but would not apply to any pipeline project, with the difference unexplained.

It has nothing to do, for example, he said, with issues such as the the price at which the gas would be sold, which is up to the companies owning the Aphrodite gas (Noble Energy, Delek, Shell) and the LNG plant in Egypt.
The companies want a revision of the revenue-sharing agreement with Cyprus, the paper said, after the government areed to renegotiate the Production Sharing Contract, or PSC, for Aphrodite.

Another matter delaying the development of the gas prospect are disagreements between the Cypriot and Israeli sides.

A part of Aphrodite’s gas lies within Israel’s Exclusive Economic Zone. Since the gas in the Yishai prospect, on the Israeli side, is part of a single geological reservoir, its production depends on agreements between the countries.

Israel and Cyprus signed a delineation agreement in 2010 but haven’t agreed so far on how to develop gas reservoirs straddling both economic zones.