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Reports on Cyprus-Egypt gas deal possibly misleading

23 August 2016

As reported on Monday, Greek Cypriot government spokesman Nicos Christodoulides said that the Egyptian Energy Minister would arrive on the island on Thursday to sign an energy agreement.

The Greek Cypriot press reports, however, have not been clear about what the South Cyprus-Egypt gas agreement involves.

Energy analyst Charles Ellinas told Cyprus Mail that “It does not sound at all like a commercial agreement”.

Without a signed gas sales agreement, specifying quantities, price and delivery timetables, there cannot be a project,” he added.

What has been described as an energy agreement may possibly be a memorandum of understanding, which has been created to delineate how gas from Aphrodite field would be used, should it be sold to Egypt.

That is to say, the agreement will specify if gas from Cyprus would be supplied to LNG plants in Egypt for export to Europe, or would be used domestically in Egypt.

Ellinas said that in any case, it is the energy companies that take the initiative in such agreements.

The agreement to be signed on Thursday or Friday appears to be more like a statement of intent, part of a framework agreement between the two countries which, while a requirement, is not necessarily binding, nor does it does it anticipate actual commercial agreements.

In light of the apparent momentum in the Cyprus negotiations, as well as the possibility of cooperation between Cyprus, Turkey and Israel for constructing a pipeline, in the event of a Cyprus settlement, the Cyprus-Egypt agreement would seem to make no sense, posing the question of why now? Cyprus Mail suggests that the announcement was, in fact, a publicity stunt.

With a background scenario of Turkey ratifying a bill which normalises relations with Israel, diplomatic missions between the two countries to be restored and plans mooted to construct a pipeline between Israel’s highly productive Leviathan field and Turkey, Cyprus Mail believes that the South’s government was trying to downplay the significance of these recent events.

The government in the South wanted to give the impression that they had alternative customers for gas from Aphrodite field, the newspaper concludes.

Cyprus Mail

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