Cyprus and Chevron at Odds Over Natural Gas Field

Chevron and the Cypriot government are at odds about the development of the Aphrodite natural gas field off the coast of the island nation, with Cyprus claiming Chevron had breached its production-sharing agreement.

The news was reported by Energy Intelligence soon after Chevron and its partners in the development of the Aphrodite field submitted a new development plan for the field. The updated plan was a response to the notice of breach of contract that the Cypriot government issued in late August.

“According to the updated plan, the production and processing of natural gas from the reservoir will be carried out through the construction of an independent floating production facility to be positioned above the Aphrodite reservoir,” Chevron said earlier this week, as quoted by Reuters.

The facility will have a capacity of some 800 million cu m daily, the report noted, extracting these from four wells. The gas will then be sent into the Egyptian gas distribution system. The Aphrodite field holds an estimated 3.5 trillion cu ft of gas.

With the government accusing the field’s operator of a contract breach there is worry the project will fall through, Energy Intelligence reported. “My wish is to see gas produced in Cyprus as soon as possible,” an unnamed source from Cyprus’s state oil and gas company told the publication. “But the perception in the government is that the operator [Chevron] is not pursuing a solution in Cyprus’ interest,” the source added.

At the same time, there is worry that the dispute could “spook” the U.S. supermajor, lead to arbitration and mire the project in legal proceedings essentially preventing its development. In the updated plan submitted by Chevron and its partners, this development would cost $4 billion.

Chevron became part of the project, and its operator, after its takeover of Noble Energy, the original holder of the license for the Aphrodite field.

By Charles Kennedy for Oilprice.com

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