After seven years of negotiations, Israel and Cyprus will be applying for international arbitration to settling a dispute over the development and distribution of Aphrodite natural gas reservoir, if the companies involved fail to come to an agreement.
The Aphrodite reservoir is located on the border between the economic waters of both countries, with most of the reservoir lying on the Cypriot side.
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Israeli Globes reported that next week a meeting will take place between Israel, Cyprus, and Greece, in the participation of the energy ministers the three countries. They will discuss a unitization agreement, in addition to the construction of an undersea gas pipeline connecting Israel and Europe.
Israel estimates the quantity of Yishai reservoir, her side of the gas field at 7-10 billion cubic meters (BCM), and Aphrodite in the Cypriot side, owned by Israeli Delek Group is estimated at 100 BMC.
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.
In the lack of a contract, Israel is refusing to allow Cyprus to develop Aphrodite because pumping gas from it will also cause gas to be pumped from the Yishai prospect.
Cypriot media report that a number of agreements for exporting gas from Aphrodite have reached the final stages before signing. Two days ago The Reuters quoted Tarek El-Molla, the Egyptian Minister of Petroleum as saying that Egypt planned to sign an agreement with Cyprus for exporting gas from Aphrodite to Egypt.
Following the reports, Nammax Oil and Gas Ltd., Eden Energy Discoveries, Israel Opportunity Energy Resources, and AGR Petroleum Services Holdings AS – the holders of rights in the Yishai prospect – asking in a letter to Petroleum Commissioner Yosi Wurzburger how Israel plans to safeguard their rights.
If Cypriots to begin developing and exporting gas from Aphrodite without a signed agreement, the loss to Israel in tax revenue and royalties is likely to amount to billions of shekels.
The gas in Aphrodite can supply Cyprus’s needs for many years but remains undeveloped due to the dispute with Israel. Without gas, Cypriots is forced to generate electricity using diesel fuel and oil, which are polluting and expensive.