LNG

A meeting has taken place in Cyprus to push forward with future East Mediterranean natural gas and LNG joint ventures recently affected by conflict in the Middle East.

NewMed Energy, the Israeli company with a stake in the Aphrodite natural gas field offshore Cyprus, said talks would continue with the Cypriot Government after the rejection of a new field development plan that includes transporting pipeline gas to Egypt for liquefaction and export to Europe as LNG or for domestic use.

The Cypriots are in favour of the Aphrodite volumes being shipped to Egypt, though are against the new plan that does not include a previously outlined floating gas processing plant at the field in Cypriot waters.

The partners in the Aphrodite licence are NewMed and energy majors Chevron Corp., the operator of the Aphrodite field, and UK-based major Shell.

The Shell stake came from its acquisition of BP Group and Chevron’s from buying Noble Energy.

The field is located in Block 12 of the Cypriot Exclusive Economic Zone (EEZ) 170 kilometres (106 miles) offshore the Cypriot city of Limassol and is estimated to hold around 4.4 trillion cubic feet of natural gas.

“The Partnership respectfully reports that, according to a letter of reply delivered to the project's operator, Chevron Cyprus Limited, the government of Cyprus has decided not to approve the Updated Plan, and has invited the partners in the Aphrodite Reservoir to continue the discussions on the matter in early September 2023,” NewMed explained.

New plan

According to the Updated Plan, the production of natural gas from the Aphrodite field and the processing thereof would be done through the construction of a subsea pipeline and connection to existing offshore and onshore infrastructure in Egypt, without the construction of a floating production and processing facility within the area of the Reservoir.

“The letter of reply states several reasons for the decision of the Cypriot government not to approve the Updated Plan, including the claim that the Updated Plan is expected to increase the technical and commercial complexity of the project, and is not expected to produce the advantages put forward as detailed in the report of 31 May 2023,” NewMed added.

“The partners in the Aphrodite Reservoir, with the assistance of their outside counsel, intend to consider the implications of the decision by the government of Cyprus and are preparing for the continued discussions,” stated NewMed.

Scheduled for commissioning by 2026, the Aphrodite gas field will be capable of delivering more than $9 billion of direct economic benefits while providing energy independence to the Republic of Cyprus.

The Israeli company, headquartered at Herzelia, north of Tel Aviv, said that the updated plan was expected to accelerate and reduce the cost of development.

LNG needs

Analysts say that the Aphrodite volumes are likely to be directed to the Egyptian Idku liquefaction plant east of Alexandria where Shell is the operator.

NewMed has a 30 percent shareholding in the Aphrodite licence while Shell and Chevron each own 35 percent.

NewMed’s other main asset is its large stake with partners in the Leviathan gas field offshore Israel, which is one of the largest in terms of its customer base in the East Med.

Leviathan is the subject of continuing pre-engineering work and discussions for the promotion of a Leviathan field expansion and the development of a floating LNG project.

The Leviathan field already supplies the Israeli domestic market as well as exporting pipeline gas to Egypt and Jordan.

Leviathan project shareholders are the NewMed Partnership with 45.34 percent, Chevron subsidiary, Chevron Mediterranean Ltd with 39.66 percent and Ratio Energies with 15 percent.

NewMed was formally known as Delek Drilling and changed its name to NewMed Energy in February 2022.

The Israeli Energy Ministry said four groups of companies have made bids in Israel's latest tender for offshore hydrocarbon exploration and production as interest grows in the East Mediterranean natural gas and LNG hub.

NewMed Energy, the Israeli natural gas company and LNG project developer in the East Mediterranean, said plans for the Aphrodite gas field offshore Cyprus are now focused on transportation of the gas by a pipeline to LNG processing facilities in Egypt.

Dec 21 (LNGJ) - Italian energy company Eni has made a new natural gas discovery offshore Cyprus in the growing gas hub of the East Mediterranean. The find was in the Zeus-1 well drilled in Block 6 and lcoated 162 kilometres (101 miles) off the Cypriot coastline in water depths of 2,300 metres. The block is held on a 50-50 basis between Eni and France’s TotalEnergies.

   “Zeus-1 is the third consecutive discovery in Block 6. It follows Cronos-1 and Calypso-1 and confirms the promising outlook for the area,” said Eni. The gas in place associated to this reservoir is preliminarily estimated at between 2 trillion cubic feet and 3 Tcf.

Egypt said it expected to reopen the Damietta liquefied natural gas export plant east of the Port of Alexandria by the end of February 2021 after an eight-year closure caused by the Arab nation’s previous gas supply crunch.

“With Damietta back on stream with its 4.5 million tonnes per annum of output, Egyptian export volumes would total around 12.5 MTPA,” said the Petroleum and Mineral Resources  Ministry in a statement.

The move forward for Damietta comes after the resolution during the latter part of 2020 of a long-standing dispute between the shareholders over contracts because of the closure.

Naturgy, the Spain-based European utility, agreed to sell its stake in the Damietta plant and to rescind its Egyptian gas contracts on departing from the Unión Fenosa Gas (UFG) joint venture.

Naturgy’s UFG partners, Italian energy company Eni and the Egyptian Natural Gas Holding Company (Egas) reached the agreement under which Naturgy would receive a series of payments adding up to US$600 million.

The utility will also receive most of UFG’s assets outside of Egypt as well as being released from 3.5 billion cubic metres annual gas procurement contract to supply its gas-fired power stations in Spain, which was due to end 2029.

Settlement

Under the settlement deal, these Spanish interests would be taken over by Eni.

The LNG plant has been idle since November 2012 when Egypt suffered natural gas shortages.

In addition to Damietta LNG, Egypt has a second export plant, the Idku facility operated by Royal Dutch Shell, and which has been back in commercial operation since 2017.

As regards Damietta plant shareholdings, the Naturgy 80 percent in Damietta liquefaction was transferred with Eni receiving 50 percent and 30 percent going to EGAS.

The resulting shareholding of the Damietta holding company, Segas, sees Eni with 50 percent, EGAS holding 40 percent and Egyptian General Petroleum Corp. with 10 percent.

Eni will also take over the contract for the purchase of natural gas for the plant and will receive corresponding liquefaction rights.

Italian company Eni, one of the biggest energy players in Egypt, said it was trying to find an agreement to allow the restart of the idled Damietta LNG export facility, located east of Alexandria, and one of two Egyptian liquefaction facilities on the East Mediterranean coast.

Import terminals for liquefied natural gas currently under construction are expected to hit a 10-year high at 144 million tonnes per annum of capacity in 2020 to prepare for increasing LNG demand in the years ahead.

Chevron Corp., the US major and operator of two world-class LNG export plants in Western Australia, has agreed to acquire Houston-based Noble Energy and its assets in US shale basins and the East Mediterranean, including the Leviathan and Tamar gas fields offshore Israel.

Cyprus has held a foundation stone-laying ceremony at the site of the Mediterranean Island’s first LNG import terminal being built at Vasilikos port near Limassol by a Chinese company and partly financed by the European Union.