Aphrodite gas: lover's quarrel

Aphrodite is owned by Noble (35% operator), Delek Drilling (30%) and Shell (35%). The field lies in Block 12, offshore Cyprus and was discovered in 2011. BG Group farmed into 35% from Noble Energy in November 2015 for USD165 million following declaration that the field was commercial in June 2015.

As reported earlier, Shell intends to use Aphrodite gas to supply ELNG, but this has now faced a new hurdle. Cyprus and Israel are arguing over the extension of the Aphrodite structure into Israeli waters. Given the importance of the gas, the regional governments are keen to avoid the dispute delaying the commercialisation of the field.

Despite its vicinity to and significantly earlier discovery than Zohr (2015), Aphrodite remains uncommercialised. In fact, its commercialisation was previously called into question given the resource was too small to justify export infrastructure. This is a recurring theme within East Med gas with export route remaining a key issue. Egyptian gas discoveries are lucky enough to have a short gas domestic market and the option to export via LNG.

Israeli gas has taken longer to get off the ground, but has reached sufficient scale to export into the region by pipeline beyond supplying its own domestic market.

Cypriot gas, and indeed Lebanon, face the challenge of a small domestic market and lack of gas export infrastructure. Cyprus has toyed with the idea of developing its own LNG terminal but currently lacks the scale of reserves required to do so.

It makes sense for Aphrodite to supply ELNG at Idku. Shell has ownership in both Aphrodite and ELNG and a direct pipeline to the plant would allow it to bypass the Egyptian gas grid. Furthermore, a direct pipeline could galvanise further exploration and development activity along the route.

ELNG is largely supplied by the West Delta Deep fields and has been operating at minimal levels since gas was diverted to the domestic grid in 2013. In 2017, it shipped 0.78 million tonnes in cargoes (vs. capacity of 7.2 mmtpa). This has meant the plant remains operational and ready to ramp up once gas is supplied. In contrast, the Damietta LNG plant has been idled and would require significant work to restart operations.

The partners of Aphrodite are now finalising the field development plan with the Cypriot government. The plan initially involves five wells with a combined output of 800mmcf/d and developed using a floating platform. Cost estimates are estimated at USD2.5 - 3.5 billion excluding the cost of any pipeline to ELNG at Idku.