London — The development of Cyprus' maiden gas discovery Aphrodite is facing an uncertain future as operator Noble Energy looks to revise the timeline for work at the project.
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Discovered in 2011, the development of the 4.1 Tcf field seemed to have finally picked up speed in November last year with the signing of a new gas exploitation agreement between the field partners and the Cypriot government.
A final investment decision by Noble and its partners Shell and Israel's Delek was expected to be taken in 2022, with first gas set to flow in 2025.
But the coronavirus pandemic, industry downturn and record low gas prices have seen companies postponing or deferring spending on new projects, and Aphrodite may well see new delays, further frustrating Cyprus's ambition to become a major gas player in the East Mediterranean.
"In response to the current COVID-19 pandemic and low-priced commodity environment, we are also adjusting our Cyprus activity schedule," Noble said in emailed comments to S&P Global Platts.
Noble has lowered its 2020 capital plan by more than 50% versus original guidance, a decrease of $900 million, and has identified $225 million in cash reductions, mainly from operating costs and administrative initiatives.
Despite looking to revise its plans at Aphrodite, Noble said it remained committed to fulfilling its commitments to the government of Cyprus.
"We will continue to work with the government and our partners to move forward development of Aphrodite as appropriate, based on global gas demand and market conditions," it said.
With global gas demand set to decline by 6-7% in 2020, according to a number of industry bodies including the International Energy Agency and the Gas Exporting Countries Forum, and prices still languishing at record lows, the prospects for Aphrodite seem uncertain.
Analysts see the picture as increasingly gloomy with partner Delek facing financial difficulties of its own.
"With Noble and Delek facing challenging times, Aphrodite's development is receding further into the future," Charles Ellinas, head of consultancy EC Cyprus Natural Hydrocarbons Company, told Platts.
"Postponing development into the depths of time is not for the benefit of Cyprus," Ellinas said.
Under the development plan, gas from Aphrodite was to be piped through a new offshore line to the Shell-operated Idku LNG plant in Egypt for export.
According to Delek, the development plan -- excluding the subsea pipeline to Egypt -- would cost some $2.5-$3.5 billion and the estimated work plan until the date of the adoption of the FID would be $150-$200 million.
Delek said in November the partners were to drill an appraisal well within two years.
2020 was also expected to mark the resumption of drilling offshore Cyprus, with dozens of wells planned, as IOCs looked to prove there was enough gas for a significant Cypriot industry to emerge.
But activity has all but ground to a halt, with drilling by players such as France's Total, Italy's Eni and the US' ExxonMobil postponed until at least next year.
The companies have been given an extension of a year to their contractual obligations under the terms of their production sharing agreements, according to Cypriot media reports.
Cyprus is home to two other major gas finds -- Calypso and Glaucus -- but with Aphrodite set for an uncertain future, it seems unlikely that these will be developed any time soon either.