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The estimate for Cyprus’s Aphrodite field has been raised from 113 BCM to 127 BCM.
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Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling Limited Partnership (TASE: DEDR.L) reported today to the Tel Aviv Stock Exchange (TASE) that they had raised their estimate for the amount of natural gas in the Aphrodite (Block 12) reservoir by 14 billion cubic meters (BCM). The estimated number of barrels of condensate (a liquid byproduct of natural gas production that can be sold separately) has also been raised. The increase resulted from an exchange of information between Israel and Cyprus, or more precisely, between the partnership in the adjacent Israeli Ishai prospect and the partnership in Aphrodite in Cyprus. Unfortunately for the partnerships in the reservoir, this increase still does not justify development of a natural gas liquefying facility in Cyprus.
The new estimates are 127 BCM of gas, up from 113 BCM, and nine million barrels of condensate, up from 8.1 million.
In December 2008, Cyprus granted Noble Energy a license for Aphrodite (Nobel Energy is also a partner in the Tamar and Leviathan gas reservoirs), and Yitzhak Tshuva became a partner in Aphrodite in February 2013. Unlike other countries, which have been delighted at gas discoveries in their territory, Cyprus’s joy has been mixed with despair, because it has a problem.
As of now, Cyprus produces all its electricity from fuel oil, which makes the country’s electricity prices the highest in Europe. Electricity consumption in Cyprus is likely to settle around 1 BCM annually (for the sake of comparison, Israel consumes about 7 BCM annually). This figure is not enough to justify the development of the reservoir for domestic use. In order to justify its development, some of the gas produced must be exported.
Constructing a facility for producing liquefied natural gas (LNG) is very expensive; the cost could reach $10 billion. Such an investment requires reserves of at least 280 BCM in order to be worthwhile. On the one hand, gas consumption in Cyprus does not justify development of Aphrodite; on the other hand, exporting the gas in liquid form requires larger quantities.
The principal option for Cyprus at the moment is exporting the gas through a pipeline. A month ago, Cypriot Minister of Energy Yiorgos Lakkotrypis met with senior officials in Jordan and Egypt in order to discuss the option of exporting gas to those countries through a pipeline.
Published by Globes [online], Israel business news – www.globes-online.com
