Major gas discovery can fuel the Cyprus dispute

Source: press release, 1 March 2019

Zohr LNG, Aphrodite, Calypso and Glaucus-1 production profile
Zohr LNG, Aphrodite, Calypso and Glaucus-1 production profile (source: Rystad Energy UCube)

Following this week’s announcement by ExxonMobil and partner Qatar Petroleum of a major gas discovery offshore Cyprus, Rystad Energy’s senior upstream analyst Palzor Shenga points out that, “ExxonMobil continues to impress with its sheer volume of discovered resources. The Glaucus-1 discovery is huge. Rystad Energy forecasts it will hold recoverable resources of around 700 million barrels of oil equivalent.”

“Cyprus could turn into an important gas hub and might consider constructing a land-based natural gas liquefaction plan after the impressive string of major discoveries in the area. We expect Glaucus-1 and the neighbouring discoveries Aphrodite and Calypso to collectively add around 2 billion cubic feet per day of gas at peak. However, we do not expect Glaucus-1 to come online until the late 2030s, due to the lack of liquefaction capacity,” Shenga continues.

“Bringing gas from these discoveries to the market will not be straightforward,” Shenga says. “Cyprus currently lacks a natural gas liquefaction facility. Egypt and Cyprus have recently agreed to build a subsea pipeline to link the significant gas resources located in Cypriot waters with Egypt’s LNG export facilities. The landmark deal is expected to carry a price tag of around USD 1 billion. This pipeline will be initially used to transport gas from Aphrodite, followed by Calypso. The liquefied gas will be then re-exported to the EU in the form of LNG. However, the project is not as easy as it sounds due to the geopolitical concerns from the neighbouring countries.”

He adds: “These discoveries are huge and can add fuel to the ongoing dispute between the governments of Cyprus and Turkey. Under these circumstances, Cyprus must make sure that the energy giants can run their operations safely, without threats of military intervention, and that they can invest in developing and bringing them into production.”

“The discovery is located at around 2,100 metres water depth in the Exclusive Economic Zone (EEZ) southwest of Cyprus. The area holds several giant discoveries, and there has justifiably been a huge buzz about the area for years,” Shenga says.