The Israeli partners in the consortium holding the concession on the Aphrodite offshore gas reservoir confirmed on Monday that they had received from the Cypriot government a ‘notice of breach’ regarding the contract between the two parties.
In a filing posted on the Tel Aviv stock exchange, the Israeli company NewMed Energy (formerly Delek) said that a day earlier (August 25) the consortium received from Cyprus’ energy minister “a notice of breach whereby the partners in the Aphrodite Reservoir have three months to remedy the breach in connection with their non-achievement of the milestone, failing which the Cypriot government will be entitled to give notice of termination of the Production-Sharing Contract”.
NewMed specified that the Cypriot government’s ‘notice of breach’ relates to one of the milestones in the contract, namely the performance (by the consortium) of the Front-End Engineering Design, or Feed.
A Feed focuses on technical requirements and identifying main costs for a proposed project. It is used to establish a price for the execution phase of the project and evaluate potential risks. The Feed is a stepping stone to the final investment decision.
In its filing NewMed added that, following receipt of this communication from the Cypriot government, “the partners in the Aphrodite Reservoir intend to submit, in the coming days, for the Cypriot government’s approval, an updated plan for development of the Reservoir (the ‘Updated Development and Production Plan’) which was prepared based on the original development and production plan, as previously approved by the Cypriot government.”
NewMed are the junior partner in the Aphrodite partnership, with a 30 per cent holding; Chevron (the operators) and BG Cyprus (Shell) each hold a 35 per cent stake.
Citing sources familiar with the matter, the Cyprus News Agency said the government is acting within the bounds of the contract.
The primary concern, the unnamed sources said, is the implementation of Cyprus’ energy programme “within the framework of the contracts entered into by the Republic”.
The same sources recalled that Nicosia has repeatedly asked the consortium to implement the Development and Production Plan agreed in 2019.
Discussions in earnest began in August 2023 when Chevron submitted a revised development plan, parts of which Cyprus rejected. The government has since given numerous extensions to the consortium with a view to finding common ground on the development of the gas field.
Discovered in late 2011, the Aphrodite gas field lies in Block 12 of Cyprus’ exclusive economic zone. It holds an estimated 4.5 trillion cubic feet of recoverable gas.
