WHAT ARE THE REASONS AND THE CONSEQUENCES OF

POSTPONING AN ALREADY AGREED GAS “DEVELOPMENT AND

PRODUCTION PLAN” FOR A LONG PERIOD OF TIME? THE

“APHRODITE” RESERVE CASE (REPUBLIC OF CYPRUS).

Petros Damianos Karagiannopoulos (Student ID No:170023199)

ABSTRACT:

The Republic of Cyprus has commenced its offshore hydrocarbon activities in 2007, when issued a first licensing round for Blocks in its EEZ. As a result, Aphrodite natural gas reservoir has been discovered, and declared commercially viable on 2015. Nevertheless, the declaration of commerciality at this point proved to be rather a contractually dictated necessity than reality; thus, both sides, Cyprus and its Contractors, decided to stall on the development of the field, while searching for better options for the transportation and sale of Aphrodite’s gas. This decision, the reasons that have driven the Aphrodite partners in it and its aftermath are going to be explored in this research paper. The purpose of this research is to explore a complex situation between two parties of a PSC in terms of contract and policy of every party that is related to the project, while the fact that this is a natural gas reserve case, further complicates the situation. In order to comprehensively analyse the subject, a wide variety of primary governmental and corporate sources has been chosen, along with many relevant news and other reports, always with consideration in the petroleum industry unique features and the geopolitical conditions of the Eastern Mediterranean region. The results of this analysis indicate that after both PSC partners have made use of specific contractually deriving rights and by treating each other in good faith, the most profitable option for both will eventually be chosen and their patience will have payed of.

PRESENTED TO: Prof. Stephen Dow

0

TABLE OF CONTENTS

ABBREVIATIONS………………………………………………………………2

1. INTRODUCTION………………………………………………………………..3

2. THE APHRODITE PSC…………………………………………………………6

2.1. Contractors Interest…………………………………………………………6

2.2. Actions following a successful discovery…………………………………...7

2.2.1. Declaration of

commerciality………………………………………...7

2.2.2. Development and Production

Plan…………………………………..7

3. THE SUGGESTED DEVELOPMENT AND PRODUCTION PLAN………..8

3.1. The original plan…………………………………………………………….8

3.2. Waiver clause………………………………………………………………...8

3.3. The difference between contractual and real

commerciality……………...9

4. DECISION MAKING PROCESS OF ANY INTERESTED

PARTIES……...10

4.1. Cyprus options and pursuit from the point of Aphrodite’s commerciality

declaration………………………………………………………………….10

4.2. Egypt and Shell……………………………………………………………..11

4.2.1. Egypt’s first reaction to the possibility of importing Cyprus’

gas..11

4.2.2. Shell’s acquisition of BG Group……………………………………

12

1

4.3. Cyprus’ other hydrocarbon projects……………………………………...16

5. CONCLUSION………………………………………………………………….19

REFERENCE LIST………………………………………………………….....21

2

ABBREVIATIONS

Art. Article

Bcm Billion cubic meters

BG British Gas

EEZ Exclusive Economic Zone

EPSC Exploration and Production Sharing Contract

EU European Union

JOA Joint Operating Agreement

KOGAS Korea Gas Corporation

LNG Liquified Natural Gas

Mcf Million cubic feet

MoU Memorandum of Understanding

PSC Production Sharing Contract

Tcf Trillion cubic feet

UNCLOS United Nations Convention on the Law of the Sea

USA United States of America

3

1. INTRODUCTION

In today’s oil and gas world the most common licensing system for exploration and

exploitation of hydrocarbons is the “Production Sharing Contract” (PSC). PSCs

determine the exact relationship between the state that licenses an operator – a

company or a consortium of companies – for a given contract area. There the fiscal

regime under which the hydrocarbons are exploited is determined, from the beginning

of an exploration project, up until the depletion of the reservoir and there might also

be provision concerning the way the facilities used to extract the hydrocarbons are to

be decommissioned1.

The specific clauses of a PSC that concern this paper are the ones determining the

transition from an exploration and appraisal period towards the beginning of the

developmental and exploitation period of a reservoir. For this transition to come in

place, any contractors should have firstly declared the commerciality of a proven

reserve. Afterwards, they should contact the responsible for petroleum activities

Minister of the concessionary country with a proposed development and production

plan, that will be finally approved by the government and therefore the operations

should begin. All those activities are usually timely determined in any PSC.

The issue to be analysed hereinafter is the questions deriving in the event of both

contractual parties of a PSC, the country and the contractors, agree on postponing the

commencing of operations although a development and production plan has been in

place. Is a course of action like this legally possible and what ramifications could

derive from it? Are any political or commercial reasons legally substantial for making

such a decision? What would be the outcome, if any of the parties decides to proceed

to any operations, without the circumstances that had let them to a decision like that

having changed at all?

The issue has clearly two aspects; one purely legalistic, where the question to be

explored is whether there is enough contractual basis for this kind of decision, and

second, a political. The latter, when properly analysed, is the one that should explain

the reasons behind a stalling decision and could also provide with a forecast for any

future developments. In order to explore this issue, the specific case scenario that has

1 For more information regarding PSCs and international petroleum fiscal regimes in general, indicatively see: Johnston, Daniel, Production Sharing Agreements (Centre for Petroleum and Mineral Law and Policy, University of Dundee 1994).

4

been chosen is the one of the “Aphrodite” natural gas reservoir, that lies in the

jurisdiction the Republic of Cyprus.

There are several reasons behind this selection; firstly, the hydrocarbon deposit is

purely consisted of natural gas, a hydrocarbon to be exploited only after the

installation of a predetermined infrastructure of pipelines and perhaps an LNG facility

and an agreement concerning trade and pricing of the natural gas to be extracted is in

place. Furthermore, the situation concerning Cyprus as hydrocarbon producer country

is highly complicated: Cyprus is a member of the European Union; the offshore

Aphrodite reserve is located in Cyprus’ “Exclusive Economic Zone” (EEZ), that

neighbors with the respective Egyptian and Israeli EEZs; the continuous political

conflict with Turkey since 1974 remains in place and, last but not least, the regional

tensions in Eastern Mediterranean Sea and the Middle East are gradually escalating,

by the time those lines are being written.

Based on the agreements between the Republic of Cyprus, Israel and the Arabic

Republic of Egypt for setting the boundaries of their respective EEZs2 and according

to the rules and procedures determined in the United Nations Convention on the Law

of the Sea (UNCLOS)3, Cyprus announced on May 4, 2007 the commencing of the

first licensing round for hydrocarbons. This first licensing round concerned the blocks

no. 1, 2, 4-12 inside the Cypriot EEZ4 5. For this reason, the Ministry of Energy,

Commerce, Industry and Tourism (hereinafter the Ministry) published a “Model

Production Sharing Contract” (Model PSC) that would be the starting point of the

2 Republic of Cyprus, The Exclusive Economic Zone and the Continental Shelf Law 2004 and 2014 (English translation and consolidation), (October 2014) <www.un.org/depts/los/LEGISLATIONANDTREATIES/PDFFILES/CYP_EEZ-CS_Law_2014.pdf>, accessed 26 March 2018.3 United Nations Convention on the Law of the Sea (adopted by the Third United Nations Conference on the Law of the Sea and opened for signature, together with the Final Act of the Conference, at Montego Bay, Jamaica, on 10 December 1982) (UNCLOS) art. 55-75.4 Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism, Licensing Rounds: 1st Licensing Round <www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/6B1A07BCFCEB6AD9C2257FA20023A2ED?OpenDocument>, accessed 28 March 2018.5 For further information on the way the 1st hydrocarbon licensing round was conducted, see: Republic of Cyprus, Ministry of Commerce, Industry and Tourism, 1st Licensing Round Offshore Cyprus: Submission of Applications Guidance Note, (February 2007) <www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/9E627A7ABDE91ACFC2257F5A0030C736/$file/Guidance_Note_1LR.pdf> , accessed 26 March 2018.

5

negotiations with any interested petroleum companies submitting an offer for

exploring and developing a Block67.

As a result of the first licensing round, Cyprus has issued a license of exploration to

“Noble Energy International Ltd” for Block 12 on October 24th, 20088. The only so far

proven and commercially declared non-associated natural gas reserves in a Cypriot

licensed Block were the result of this exploration and the reserve has been so forth

named “Aphrodite”; at June 2015 the Contractors of the Block 12 have announced

that there are proven reserves of approximately 4.5 tcf and that the reserve is

commercially viable9 10.

The issues to be discussed hereinafter will concern Aphrodite reserve and will

describe the contractual and political facts, interactions and ramifications between any

parties involved in its Development and Production Plan, which has so far been put on

hold; although a development plan has been agreed in first place, it “is not as yet final

(as of March 2016), but the most recent plan includes, in the first phase, five

production wells with a high flow rate a sea depth of 1.700 meters, which will reach

different depths in the reservoir layers at an overall depth of approximately 5.000

meters”, Delek Drilling” reports in its official webpage11.

6 Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism, Model Production Sharing Contract (Nicosia, February 2007) <www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/9E627A7ABDE91ACFC2257F5A0030C736/$file/Model_PSC_1LR.pdf>, accessed 28 March 2018.7 Since the actual PSC in force between Cyprus and the Contractors has not been made publicly available, all legal arguments, hypothesis and conclusions that will be conducted, shall be based on the study of the aforementioned Model PSC.8 See Republic of Cyprus, supra note 4.9 Cyprus Hydrocarbon Company, Block 12 <http://chc.com.cy/activities/block-12/>, accessed 29 March 2018. 10 See Republic of Cyprus, supra note 4.11 Delek Drilling, Aphrodite Gas Field <www.delekdrilling.co.il/en/project/aphrodite-gas-field>, accessed 29 March 2018.

6

2. THE APHRODITE PSC

2.1. Contractors Interest

As mentioned above, Noble (initially, 70% ownership of the license and operator)

were the first to have reached an agreement with the Cypriot government for Block 12

of Cyprus’ EEZ12. They act as the operator in a Joint Operating Agreement (JOA)

between them, “Delek Drilling Limited Parternship” (15%) and “Avner Oil

Exploration Limited Parternship” (15%), wholly owned subsidiaries of the respective

companies, “Delek Drilling” and “Avner Oil & Gas Ltd”, by the time the agreement

between the two parties took place13.

Although those were the original Contractors of Block 12, several changes have

afterwards occurred. More specifically, on May 2017 Delek Drilling and Avner Oil

completed a successful merger under “Delek Group”14, meaning that 30% of the

license now is controlled by Delek. But the major change in the structure of the JOA

was the acquisition by “BG Cyprus Limited”, a wholly owned subsidiary of “British

Gas”, on November 2015, of half the rights owned by Noble. Thus, from this point

on, BG Group owns 35% of the Aphrodite rights15. Also, on February 2016, “Royal

Dutch Shell” managed to fully incorporate BG Group into its corporate structure16,

establishing Shell subsequently as the father company of “BG Cyprus Limited”. To

summarise, the final percentage of interest on Aphrodite field is as follows: Noble

(35% and operator), Shell (35%) and Delek (30%).

12 Noble Energy, Operational Areas, (December 2017) <www.nblenergy.com/fact-sheet>, accessed 28 March 2018.13 Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism, Granted Licenses <www.mcit.gov.cy/mcit/hydrocarbon.nsf/page16_en/page16_en?OpenDocument>, accessed 28 March 2018.14 Rabinovitch, Ari, Israeli energy firms Delek Drilling, Avner Oil to finally merge, ‘Reuters’ (17 May 2017) <www.reuters.com/article/us-delek-drill-avner-oil-expl-m-a/israeli-energy-firms-delek-drilling-avner-oil-to-finally-merge-idUSKCN18D15G>, accessed 2 April 2018.15 Globes, BG partners with Noble, Delek in Cyprus’s Aphrodite, (23 November 2015) <www.globes.co.il/en/article-bg-partners-with-noble-energy-delek-in-cypruss-aphrodite-1001083290>, accessed 1 April 201816 Bomey, Nathan, Shell completes $53B deal for BG Group, ‘USA TODAY’ (15 February 2016) <www.usatoday.com/story/money/2016/02/15/royal-dutch-shell-bg-group/80403694/>, accessed 2 April 2018.

7

2.2. Actions following a successful discovery

2.2.1. Declaration of commerciality

According to the Model PSC, the procedure to be followed in the event of a

successfully appraised non-associated natural gas reserve is the following: The

Contractor has to declare the reserve commercially exploitable within three (3)

months of the expiration date of the second renewal of the exploration period, as this

is defined in article 2.217. In the case of Aphrodite this happened on June 07, 201518 19.

2.2.2. Development and Production Plan

Afterwards, the Contractor is obliged to meet with the Minister and propose a

development and production plan. He has to suggest any amendments and

modifications he deems necessary and negotiate them with the Contractors20. The

Council of Ministers should finally ratify the exploitation license21. Development

should commence after the approval of the working program and in no more than six

(6) months’ time22.

There is also a clause that provides the Minister with the right to give rise to contract

termination if there is any disruption of production for at least six (6) months, decided

by the Contractor without the Minister’s consent23 – that has not been the case for

Aphrodite’s case though. Both parties, Contractors and Cypriot government have

decided to waiver on their rights and postpone indefinitely the commencing of any

operations agreed24. The reasons for this decision and any possible complications this

might has had or will have in the future, shall be subsequently recorded and analysed.

17 See Republic of Cyprus, supra note 6, art. 5.3.18 Delek Group, Notice of Declaration of Commerciality, (7 June 2015) <https://ir.delek-group.com/static-files/b0c496ef-9eb8-4781-8ed7-236281f3feba>, accessed 5 April 2018.19 Cyprus Profile, Declaration of Aphrodite gas field commerciality, <www.cyprusprofile.com/en/articles/view/declaration-of-aphrodite-gas-field-commerciality>, accessed 4 April 2018.20 See Republic of Cyprus, supra note 6, art. 5.6.21 Ibid, art. 5.11.22 Ibid, art. 5.10.23 Ibid, art. 5.14.24 Ibid, art. 23.6.

8

3. THE SUGGESTED DEVELOPMENT AND PRODUCTION PLAN

3.1. The original plan

The original plan concerned the construction of a gas pipeline to Egypt’s LNG plant

Idku and a trade agreement with Egypt. Especially after BG Group purchased its 35%

interest in Aphrodite, the first thought was to link the reserve with the idle LNG

facility at Idku, Egypt – approximately 170 km south from the reserve25. The reason

for this is that BG Group, and subsequently Shell, is the operator of the two-train, 10

bcm/year, LNG liquefaction plant26. In accordance to this, Egypt and Cyprus have

signed a deal, agreeing to the transport of natural gas via subsea pipeline

infrastructure to be consumed domestically in Egypt and/or be exported again

overseas27. At this point we should also mention that the predicted maximum daily

capacity in the first production phase would be set at about 800 mcf/day, according to

Delek28, which should qualify as a quite large amount of daily produced gas.

3.2. Waiver clause

The only contractually right way to waiver on a right is specifically determined in the

Model PSC: The Cypriot government and the Contractors, by mutually agreeing on a

waiver – at this point the Minister should have written and signed a waiver that

explains this course of action in detail29 –, have raised a series of legal questions; is it

a contractual breach that the development operations have not started as of six (6)

months after the approval of the development and production plan30? Has this course

of action abolished Cyprus of its rights, described at article 5.1431, that provides the

ability of contract termination, in the event that the Cypriot government changes its

mind?

25 Offshore Energy Today, BG scoops Aphrodite discovery stake, <www.offshoreenergytoday.com/bg-scoops-aphrodite-discovery-stake-cyprus/>, accessed 2 April 2018.26 Shareholders of the Egyptian LNG Project in Idku: “The Egyptian Gas Holding Co” (12%), “The Egyptian General Petroleum Coproration” (12%), “British Gas” (35.5%), “PETRONAS” (35.5%), “Gaz de France” (5%). Source: Arab Republic of Egypt, Ministry of Petroleum, Strategic Projects: Egyptian LNG Project in Idku <www.petroleum.gov.eg/en/ProjectsandActivities/StrategicProjects/Pages/Idku.aspx>, accessed 24 April 2018.27 LNG World News Staff, Cyprus, Egypt sign gas supply deal, ‘LNG World News’ <www.lngworldnews.com/cyprus-egypt-sign-gas-supply-deal/>, accessed 21 April 2018.28 See Delek Drilling, supra note 11.29 See Republic of Cyprus, supra note 6, art. 23.6.30 Ibid, art. 5.10.31 Ibid, art. 5.14.

9

Firstly, the waiver clause that exists in article 23.6 proves that there is no contractual

breach in place, nor there is a precedent of some sorts to be claimed by the

Contractors. But, as long as contract termination clause exists (art. 5.14), along with

the foretold written waiver clause in article 23.6, if Cyprus decides at some point that

the Contractors should commence the development operations and announces its

decision to them, calling them either to suggest changes to the previously agreed

development and production plan or to immediately commence operations based on

any ratified working program, any disagreement could eventually lead to a successful

termination of the PSC. In the possibility of dispute to be resolved via arbitration, any

verdict to be reached should be in favour of the Republic of Cyprus, should the

government have followed the exact actions described above.

3.3. The difference between contractual and real commerciality

Both parties have agreed on a development and production plan that, although

contractually necessary, has not been able on its own to classify Aphrodite reserve as

a commercially viable option for exploitation. For this to be achieved, a viable

transfer and trade option should become available, while the possibility of a raise on

global natural gas sales prices would also be a significant lift towards this direction32.

The contradiction here is obvious: Although the contractors have declared

commerciality and are therefore obliged to proceed suggesting a development and

production plan, they describe it as insufficient and non-commercially viable yet. This

decision is also based on the shortage of time they were facing33; if the option of

further extension of the exploration and appraisal period had been contractually

available, the Contractors would have gladly chosen to extend it. Deciding to proceed

with a to-be-postponed development plan, was the better option in comparison to any

other both parties had at the time, options that will be discussed below.

32 Delek Group, Submission to the Government of Cyprus of the Proposed Outline Development Plan of the Aphrodite Reservoir, (11 June 2015) <https://ir.delek-group.com/static-files/98485206-6f2f-480a-b634-50939375756d>, accessed 5 April 2018.33 For a comprehensive understanding of time frames of appraisal of a discovery and development and production period concerning Cyprus’ Model PSC see: Republic of Cyprus, supra note 6, art. 5.

10

4. DECISION MAKING PROCESS OF ANY INTERESTED PARTIES

4.1. Cyprus options and pursuits from the point of Aphrodite’s

commerciality declaration

By the time both parties decided on a waiver, only two more were options available:

The first one was linking Aphrodite with Israel’s developing pipeline infrastructure,

export the gas to Israel and from there to any other market. This course of action was

never considered viable by the Cypriot government, since any relative to the subject

negotiations that have so far taken place, have reached a deadlock; Israel would not

ask anything lower than 6% of the sale profits, while Cyprus is unwilling to offer

more than 2%. Also, Israel was not able to provide reassurances about the timeframe

of the working plan and that the nearby Leviathan field34 infrastructure could

eventually be linked to Aphrodite. Notably, Israel is actively trying all this time to

force persuade Cyprus into an agreement to link Aphrodite to Leviathan and

consequently with Israel’s pipeline infrastructure, which has been deemed as an

unreasonable demand and an unrealistic choice from the Cypriot government35 36.

The second option was to build a new LNG facility in Cyprus, thus establishing the

Republic as the first energy hub of the region37 38. After feasibility studies that were

conducted concerning the enhancing of the existing very basic facilities of Vassilikos

port39 to host a floating storage facility for LNG to be used at least for local power

34 For more information and latest news regarding Leviathan gas reserve, indicatively see: Cohen, Tova; Rabinovich, Ari, Leviathan gas field developers approve $3.75 billion investment, ‘Reuters’ (23 February 2017) <www.reuters.com/article/us-israel-natgas-leviathan/leviathan-gas-field-developers-approve-3-75-billion-investment-idUSKBN1620OS>, accessed 14 April 2018.35 SigmaLive, Disputes between Israel and Cyprus over Aphrodite reservoir, (23 November 2015) <www.sigmalive.com/en/news/energy/137951/disputes-between-israel-and-cyprus-over-aphrodite-reservoir>, accessed 22 April 2018.36 Cyprus Daily, Israeli demands for “Aphrodite” field are unreasonable reveals Government source, (15 March 2018) <http://english.cyprustimes.com/2018/03/15/israeli-demands-for-aphrodite-field-are-unreasonable-government-sources-tell-cna/>, accessed 22 April 2018.37 Cyprus Profile, Cyprus: An energy hub of attraction, (24 January 2016) <www.cyprusprofile.com/en/articles/view/cyprus-an-energy-hub-of-attraction>, accessed 19 April 2018.38 For a more detailed overview of the LNG facilities projects in Eastern Mediterranean, see: Corkhill, Mike, Eastern Mediterranean gas discoveries redefine LNG playing field, ‘LNG World Shipping’ (28 March 2018) <www.lngworldshipping.com/news/view,eastern-mediterranean-gas-discoveries-redefine-lng-playing-field_51240.htm>, accessed 5 April 2018.39 For more information about Vassilikos port, Cyprus, see: Shoham, Vassiliko Port, ‘Shoham Cyprus Ltd’ <www.shoham.com.cy/content/vassiliko-port>, accessed 24 April 2018.

11

production40 41, Aphrodite by itself was deemed not big enough a reservoir to

commercially justify an investment like this.

What must also be taken into consideration is that Cyprus’ long term strategic

planning is aiming towards the direction of exporting LNG to the EU, which is

definitely the intention of EU policy makers too42, because of the utter need to

diversify their gas supply; for a long period of time, natural gas demand in the EU is

being satisfied by imports from Russia43. Only this way Cyprus would be able to

strengthen its political position inside the EU, acquire eager allies on its attempts of

resolving the longstanding Cyprus-Turkey dispute in a more favorable way and could

stand firm against the Turkish provocations claiming to have rights on the Republic’s

EEZ44.

4.2. Egypt and Shell

4.2.1. Egypt’s first reaction to the possibility of importing Cyprus’ gas

After the preliminary agreement between Egypt and Cyprus about transport and trade

of Aphrodite’s gas, several events have taken place; Despite this agreement, Egypt

obviously is on track to become again self-sustainable in terms of gas supply, mostly

40 Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism, LNG Terminal, <www.mcit.gov.cy/mcit/hydrocarbon.nsf/page19_en/page19_en?OpenDocument>, accessed 26 March 2018.41 Anastasiou, Angelos, Vassilikos energy hub to host floating LNG facility, ‘CyprusMail Online’ (14 September 2017) <http://cyprus-mail.com/2017/09/14/vassilikos-energy-hub-host-floating-lng-facility/>, accessed 21 April 2018.42 For a broader understanding of EU policy makers’ thoughts, see: Baconi, Tareq, Pipelines and Pipedreams: How the Eu can support a regional gas hub in the Eastern Mediterranean, ‘European Council on Foreign Relations’ (21 April 2017) <www.ecfr.eu/publications/summary/pipelines_and_pipedreams_how_the_eu_can_support_a_regional_gas_hub_in_7276>, accessed 24 April 2018.43 Eurostat, EU imports of energy product – recent developments, (April 2018) <http://ec.europa.eu/eurostat/statistics-explained/index.php/EU_imports_of_energy_products_-_recent_developments>, accessed 24 April 2018.44 For more information about Turkish provocations and claims regarding Cyprus’ EEZ and the hydrocarbon exploration activities in it and the general assessment of the East Mediterranean gas outlook, see: Ellinas, Charles, East Mediterranean – a mixed bag, ‘Petroleum Economist’ (12 December 2017) <www.petroleum-economist.com/articles/upstream/exploration-production/2017/east-mediterranean-a-mixed-bag>, accessed 26 April 2018 and Smith, Hannah Lucinda; Carassava, Anthee, Turkish fury as Cyprus allows Total to drill for offshore gas, ‘The Times’ (12 July 2017) <www.thetimes.co.uk/article/turkish-fury-as-cyprus-allows-total-to-drill-for-offshore-gas-vc98l8cgh>, accessed 27 March 2018.

12

because of Zohr reservoir, that began production in December 201745 46, thus any

imports of Cypriot gas for domestic consumption might seem unnecessary. The other

big stumbling block for the initial plan, is the continually low prices of natural gas and

LNG in markets around the globe, in accordance with forecasts deeming the prices to

remain low the next few years47. The assumption is that at least Egypt has also tried to

buy time, the same way the Aphrodite partners have tried too.

4.2.2. Shell’s acquisition of BG Group

Furthermore, when it comes to the Aphrodite reserve and conducting business in

Egypt combined, the first company that should be taken into consideration is Shell,

one of the biggest petroleum companies globally and a company that has sufficient

political leverage to pursue its interests. Shell, unquestionably the larger petroleum

company, in terms of market value, technological expertise and power, in the

Aphrodite partnership, would inextricably relate any of its corporate decisions

regarding the exploitation of this particular gas reserve with its general strategic

planning for the Eastern Mediterranean and Middle East.

When Shell acquired BG Group, there were fears that the reason for stalling on

Aphrodite’s development was that Shell ought not to be interested in having business

with Egypt, according to the company’s “general business principles”48.There is a

clear conclusion when studying those business principles: Shell is not interested in

investing at countries that experience a lack of transparency in the energy sector

and/or suffering from a democratic deficit. Therefore, Shell expanding its business in

Egypt via the acquisition of BG Group, a major shareholder and operator of Idku

LNG facility, raises a series of questions.

45 Zohr, one of the largest known gas reserves in the world (approximately 30 tcf), is located in Egyptian EEZ. Eni, the owner of 60% interest, along with Rosneft (30%) consist the consortium under a PSC with the Egyptian government. For more details, see: Eni.com, Zohr: production underway in record time, (December 2017) <https://www.eni.com/en_IT/operations/upstream/exploration-model/zohr-egypt.page>, accessed 20 April 2018.46 Powell, William, The rapid rise of Zohr output is on track to end Egypt’s reliance on LNG imports this year, ‘Natural Gas World’ (26 April 2018), <www.naturalgasworld.com/eni-ramps-up-egypts-zohr-field-60720?#signin>, accessed 26 April 2018.47 See Ellinas, Charles, supra note 44.48 Shell, Shell General Business Principles, ‘Shell International Limited’ (2014) <www.shell.com/promos/sgbp-english/_jcr_content.stream/1519770430488/4545bab791582e4b0fda03a2277f8440add9d15b2790005e3a82381956b002b0/shell-general-business-principles-2014.pdf?> accessed 27 March 2018.

13

The seemingly contradictory decision of Shell to buy a company that has invested that

much in a country like Egypt is explained. First and foremost, Egypt has gone through

some major improvements towards attracting more direct foreign investments the past

few years, after the new regime was stabilised in power and especially after Zohr

reserve’s discovery. Egypt has adopted some amendments in its natural gas law49. By

regulating gas activities, the country attempts to modernise its energy sector, actively

pursuing its chances of becoming the first Eastern Mediterranean energy hub50.

The other reason Shell is more than willing in conducting business in Egypt – apart

from the most obvious, that since they own an idle LNG facility of that size, they

would prefer that it reignites its operations, even if their intention was to eventually

sell their shares of it – is that the Egyptian government, because of the turmoil period

the country endured at the beginning of the decade, ended up owing Shell $1.35B in

unpaid receivables at the end of 201651. Shell would certainly like to facilitate Egypt’s

attempts, because, apart from the prospecting profits, would eventually like to get

fully repaid, while the Egyptian government would also be extremely interested in

reigniting operations in its idle facilities for the exact same reasons.

In order, though, to fully comprehend a corporate decision of that magnitude, as the

acquisition of BG Group and therefore Idku LNG plant, the company’s overall

strategic planning should be identified in accordance with the regional geopolitical

environment. Shell has been very actively engaged in LNG trading the recent years.

In fact, the company was the one to report an unpredicted excess in demand for LNG

for the year 201752. Thus, any expanding of its business in the natural gas and more

specifically the LNG field of business, should not be of any surprise.

But even if the LNG demand forecasts are those that suggest the expansion in more

LNG facilities, why is Egypt the country to invest in? Shell seems more than willing

to invest in Egypt, the moment that the country, after many years of destabilisation,

49 Egypt Oil & Gas, Egyptian Cabinet Approves Amendments in Gas Law, (21 February 2018) <http://egyptoil-gas.com/news/egyptian-cabinet-approves-amendments-in-gas-law/>, accessed 3 April 2018.50 Reuters Staff, With new gas deals, Egypt closes in on energy hub goal, ‘Reuters’ (28 December 2017) <https://af.reuters.com/article/africaTech/idAFL8N1O54ES>, accessed 5 April 2018.51 MEES, Shell Recommits To Egypt With Plans To Double Offshore Output, (23 March 2018) <www.mees.com/2018/3/23/corporate/shell-recommits-to-egypt-with-plans-to-double-offshore-output/47a18530-2eba-11e8-9c75-fb68f6d00453>, accessed 5 April 2018.52 Shell Global, Shell Launches LNG Outlook 2018, ‘’Royal Dutch Shell plc’ (2018) <www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-outlook.html>, accessed 5 April 2018.

14

finally gets back on track and, also, the rest of Middle East region is experiencing an

extreme rise in tensions; at the time that the longstanding Syrian conflict is very close

to be transformed into a widely internationalised conflict, Egypt could prove to be a

safe harbour for conducting energy business in the region.

The reason mentioning the situation in Middle East is because one of the bigger

investments Shell has ever made in the gas sector, is the construction of the Qatar

LNG facility, one of the two LNG liquefaction plants owned (30% Shell interest) by

Shell in the Arab world, before the deal with BG Group had been achieved53. The oil

rich Gulf state of Qatar is facing a series of problems after an embargo imposed on it

by the Arabic peninsula states, that could eventually influence the state of operations

in this particular LNG facility.

Furthermore, there are fears that this could prove to be an extremely lengthy dispute

with various scales of escalation, which could even lead the country to be actively

involved in the case of a widespread internationalisation of the Syrian conflict. Even

if this is not going to be the case, the risk of again-to-be-sanctioned by the USA, Iran

involvement in a regional warfare, would actually mean that Straits of Hormuz could

close for a period of time and the Persian Gulf would once again become an

unsuitable place for safe transit of trade cargos. But even if the tensions in the region

somehow eventually deescalate, there is no way to predict whether and when the

situation between Saudi Arabia and Qatar will be resolved, as most analysts firmly

believe their relationship status could only get worse in the foreseeable future54.

53 Shell Investors’ Handbook 2012-2016, Additional Integrated Gas Data, ‘Royal Dutch Shell plc’ (2017) <http://reports.shell.com/investors-handbook/2016/data/lng-and-gtl.html>, accessed 5 April 2018.54 For more information on Qatar crisis, see GCC, Qatar – Gulf crisis: All latest updates, ‘Al Jazeera News’ (2018) <www.aljazeera.com/news/2017/06/qatar-diplomatic-crisis-latest-updates-170605105550769.html>, accessed 26 April 2018.

15

Middle East Oil and Gas Pipelines (Mondialisation.ca, 2015)

Taking this complex situation carefully into consideration and in addition with all the

above-mentioned facts and reasons concerning Egypt and LNG demands, Shell’s

decision to acquire Idku facility not only makes sense, but also ratifies the intention of

Shell to have Idku back up and running in as short notice as possible. The addition of

Aphrodite’s gas to Idku terminal would be of a significant importance towards that

goal.

Nevertheless, we should mention that this course of action that Shell has chosen about

its Egypt related business, could eventually prove to be of a highly opportunistic

nature; a fairly short-term strategic planning – of maybe less than two decades –

might have been in place, that, firstly, acts as the backup plan for Shell to meet its

continually rising demands for LNG in the event that political developments in the

16

region disrupt the company’s works in Qatar and in order to facilitate the payments of

the excessive Egyptian debts towards the company. This forecast could be enhanced

by the following two facts: Aphrodite reserve production is supposed to be of a

significantly high daily amount, as it has been mentioned above55. Also, production

from Shell’s Egyptian investment, “the Burullus concession increased to 526 mmcf/d

and over 6,000 bbl of condensates last year”, Chairman of Shell JVs Rashpetco and

Burullus Hisham Al Attar said, according to a statement from the Egyptian Oil

Ministry56. Either way, it is more than obvious that Shell is trying to rapidly increase

its production in the Eastern Mediterranean Sea and this shall lead to the exploitation

of Aphrodite’s reserve sooner or later.

4.3. Cyprus’ other hydrocarbon projects

After the 2013 bailout program57, Aphrodite, and any other reserves to be discovered

have been the first glimmer of hope for the struggling economy of the country, that

suffers from high unemployment rates, is in dire need of new foreign direct

investments and increased revenues. Nevertheless, because of all the facts that have

taken place and decisions made by Cyprus and the Contractors, Aphrodite’s

development is still on hold. In the meantime, Cyprus kept exploring its capabilities in

the hydrocarbon sector and continued with the licensing of more Blocks in its EEZ,

hoping that any significant discovery could eventually establish Aphrodite a

commercially viable project too.

More specifically, Cyprus has so far issued two licensing rounds for Blocks in its EEZ

and has planned a third one. During the first licensing round, that was due to August

16, 2007, the only license that had been granted was Block 12, where Aphrodite was

discovered58. During the second licensing round though (February 11, 2012 – May 11,

2012), Cyprus has granted five (5) more licenses: three (3) licenses for the Blocks 2, 3

and 9 that were signed on January 24, 2013 to the conglomerate of “ENI Cyprus

Limited” and “KOGAS Cyprus limited” – both wholly owned subsidiaries of Eni and

KOGAS respectfully – and two more licenses to “TOTAL E&P Cyprus B.V.” –

55 See Delek Drilling, supra note 11.56 Energy Egypt, Production from Shell’s Burullus gas field rises to 526 mmcf/d in past year, (5 September 2018) <https://energyegypt.net/tag/burullus-field/>, accessed 28 March 2018.57 BBC News, Cyprus bailout: Deal reached in Eurogroup talks, (25 March 2013) <www.bbc.co.uk/news/world-europe-21916102>, accessed 28 March 2018.58 See Republic of Cyprus, supra note 4.

17

TOTAL’s wholly owned subsidiary – for the Blocks 10 and 11, on February 6, 201359 60. Finally, another EPSC has been signed with a consortium of Eni and TOTAL (50-

50% stakes, Eni the operator) regarding Block 661.

TOTAL has relinquished Block 10 on July 2015 but ExxonMobil and Qatar

Petroleum have reached an agreement with the Minister and have signed an EPSC for

Block 10 on April 2017. The ExxonMobil-Qatar Petroleum consortium is planning to

drill a first exploration well in 201862 63. Eni has also acquired 50% of interest in

Block 11, previously fully owned by TOTAL, while the latter remains the operator64.

After the first drilling attempt though, the results seem to be disappointing in terms of

quantity for Block 1165.

That is not the case for Block 6 however. On February 8, 2018, Eni has announced a

very promising discovery in Block 666 that has “excellent reservoir characteristics”,

after intensive data collection from the well drilled there. The reserve has thus been

named Calypso 1 and is believed to be a confirmation of “extension of the ‘Zohr like’

play in the Cyprus EEZ”, as Eni reports on a press release that has issued67.

Speculative estimates so far report a 6-8 tcf reserve and “the findings are

59 Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism, Licensing Rounds: 2nd Licensing Round <www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/9D1FB4E966F93F27C2257FA200235A16?OpenDocument>, accessed 28 March 2018.60 For the 2nd licensing round, the Republic has published a different Model PSC, a “Model Exploration and Production Sharing Contract (Model EPSC)”. See: Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism, Model Exploration and Production Sharing Contract (February 2012), <www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/9D1FB4E966F93F27C2257FA200235A16/$file/Model_EPSC_2LR.pdf>, accessed 28 March 2018.61 Reuters Staff, Cyprus president says Total, Eni to start drilling Block 6 by early 2018 -Le Figaro, ‘Reuters’, (6 November 2017) <www.reuters.com/article/energy-cyprus-drilling/cyprus-president-says-total-eni-to-start-drilling-block-6-by-early-2018-le-figaro-idUSL5N1NC5VP>, accessed 8 April 2018.62 Deloitte, Oil & Gas in Cyprus: Where potential lies, ‘Deloitte Limited’ (2018) <www2.deloitte.com/content/dam/Deloitte/cy/Documents/energy-resources/oil-and-gas/CY_EnergyAndResources_OilAndGas_Noexp.pdf>, accessed 8 April 2018.63 ExxonMobil, Agreement signed to explore offshore Cyprus, (2018) <http://corporate.exxonmobil.com/en/company/multimedia/the-lamp/agreement-signed-to-explore-offshore-cyprus>, accessed 8 April 2018.64 Enipedia, Eni’s activities in Cyprus, ‘Eni Cyprus Limited’ <www.eni.com/enipedia/en_IT/international-presence/europe/enis-activities-in-cyprus.page>, accessed 10 April 2018.65 See Reuters Staff, supra note 61.66 Offshore Energy Today Staff, Report: Eni, Total in large gas discovery offshore Cyprus, ‘Offshore Energy’ (5 February 2018) <www.offshoreenergytoday.com/report-eni-total-in-large-gas-discovery-offshore-cyprus/>, accessed 29 March 2018.67 Eni, Eni announces a gas discover Offshore Cyprus, (8 February 2018) <www.eni.com/docs/en_IT/enicom/media/press-release/2018/02/PR_Eni_Cyprus_Calypso.pdf > accessed 27 March 2018.

18

encouraging… but the morphology of the particular target is complicated so we need

more time [to evaluate the discovery]”, as Yiorgos Lakkotrypis, the Cypriot Minister

of Energy, Commerce, Industry and Tourism has reported68.

Cyprus offshore Blocks (Delek Drilling 2018).

68 The Oil & Gas Year, Eni, Total in Cyprus find: reports, (5 February 2018) <www.theoilandgasyear.com/news/eni-total-in-cyprus-find-reports/>, accessed 27 March 2018.

19

5. CONCLUSION

The latest developments in Cyprus’ EEZ seem to finally reward the country officials’

patience and stalling for the development of Aphrodite and the difficult situation both

parties had to endure in a contractual manner is not going to cause any problems in

their working relationship. If Aphrodite’s partners, along with any other Contractors

in reserves like Calypso 1, choose to invest in Cyprus and the infrastructure there, that

would mean that the first physical natural gas trading hub in Eastern Mediterranean

Sea, potential that at this point only Egypt has, because of the Idku and Damietta

LNG facilities there.

In order for Cyprus to meet its geopolitical demands, the goal should remain to export

its gas to the EU, regardless the final destination of the pipelines to be constructed.

The cost of taking gas from Cyprus to Egypt, liquefying it there and then transporting

it back to Europe is still the major stumble, since it is deemed not to be a competitive

option in comparison to Russian piped gas. Nevertheless, recently, the EU signed an

MoU with Egypt, updating their cooperation in matters of energy and with a clear

view towards importing LNG from the North African country69.

Two of the major petroleum companies that are highly involved in the so far known

and commercially viable reserves of the Cyprus EEZ, Shell and Eni, would definitely

prefer the Egyptian option and most probably they are actively pushing towards this

direction, even if they eventually invest in some minor LNG infrastructure in the

island too. Eni would surely prefer to eventually link Calypso 1 with Zohr and Shell is

actively trying to restart operations in Idku facilities. TOTAL, on the other side, not

currently having any active projects in place to be connected with the Cypriot

reservoirs, would prefer the most favorable economically decision.

The most recent to the time this paper is being written developments show that the

Egyptian option is closer than any other; in November 2017, a preliminary agreement

to transport gas to Idku facilities where it will be liquified and then re-exported firstly

to Europe, has been signed between Egypt and Cyprus70. Latest reports say that there

could even be a change in Israel’s plans: Shell is supposed to facilitate the unitisation

69 Khatinoglu, Dalga; Shaban Ilham, EU, Egypt sign Energy MoU, ‘Natural Gas World’ (23 April 2018) <www.naturalgasworld.com/eu-egypt-sign-mou-60631?#signin>, accessed 26 April 2018.70 Energy Egypt, Egypt, Cyprus to link Aphrodite gas field with Idku, Damietta LNG plants, (25 March 2018) <https://energyegypt.net/2018/03/25/egypt-cyprus-to-link-aphrodite-gas-field-with-idku-damietta-lng-plants/>, accessed 5 April 2018.

20

of both Leviathan and Aphrodite pipelines, directing them to Egypt and buying

Cypriot gas71, while some will be reserved for domestic consumption in the

Republic72.

71 Orphanides, Stelios, Lakkotrypis confirms Shell’s interest to buy Cypriot gas, ‘BusinessMail’ (13 March 2018) <http://cyprusbusinessmail.com/?p=60873>, accessed March 27 2018.72 Benmeleh, Taacov; Rakteem Katakey, Shell to Mull Buying Israel, Cyprus Gas for Egypt Plant, ‘Bloomberg’ (20 August 2017) <www.bloomberg.com/news/articles/2017-08-20/shell-is-said-to-mull-buying-israeli-cyprus-gas-for-egypt-plant>, accessed 30 March 2018.

21

REFERENCE LIST

PRIMARY SOURCES

Books

Johnston, Daniel, Production Sharing Agreements (Centre for Petroleum and

Mineral Law and Policy, University of Dundee 1994).

Treaties

United Nations Convention on the Law of the Sea (adopted by the Third

United Nations Conference on the Law of the Sea and opened for signature,

together with the Final Act of the Conference, at Montego Bay, Jamaica, on 10

December 1982) (UNCLOS).

Contracts

Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism,

Model Production Sharing Contract (Nicosia, February 2007)

<

www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/9E627A7ABDE91ACFC2257F5

A0030C736/$file/Model_PSC_1LR.pdf>, accessed 28 March 2018.

Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism,

Model Exploration and Production Sharing Contract (February 2012),

<

www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/9D1FB4E966F93F27C2257FA20

0235A16/$file/Model_EPSC_2LR.pdf>, accessed 28 March 2018.

National Legislation

Republic of Cyprus, The Exclusive Economic Zone and the Continental Shelf

Law 2004 and 2014 (English translation and consolidation), (October 2014)

<

www.un.org/depts/los/LEGISLATIONANDTREATIES/PDFFILES/CYP_EE

Z-CS_Law_2014.pdf>, accessed 26 March 2018.

22

Official Governmental Webpages

Arab Republic of Egypt, Ministry of Petroleum, Strategic Projects: Egyptian

LNG Project in Idku

<www.petroleum.gov.eg/en/ProjectsandActivities/StrategicProjects/Pages/

Idku.aspx>, accessed 24 April 2018.

Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism,

Granted Licenses

<www.mcit.gov.cy/mcit/hydrocarbon.nsf/page16_en/page16_en?

OpenDocument>, accessed 28 March 2018.

Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism,

Licensing Rounds: 1st Licensing Round

<

www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/6B1A07BCFCEB6AD9C2257FA

20023A2ED?OpenDocument>, accessed 28 March 2018.

Republic of Cyprus, Ministry of Commerce, Industry and Tourism, 1st

Licensing Round Offshore Cyprus: Submission of Applications Guidance

Note, (February 2007)

<

www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/9E627A7ABDE91ACFC2257F5

A0030C736/$file/Guidance_Note_1LR.pdf> , accessed 26 March 2018.

Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism,

Licensing Rounds: 2nd Licensing Round

<

www.mcit.gov.cy/mcit/hydrocarbon.nsf/All/9D1FB4E966F93F27C2257FA20

0235A16?OpenDocument>, accessed 28 March 2018.

Republic of Cyprus: Ministry of Energy, Commerce, Industry and Tourism,

LNG Terminal,

<www.mcit.gov.cy/mcit/hydrocarbon.nsf/page19_en/page19_en?

OpenDocument>, accessed 26 March 2018.

Official Corporate Webpages

Cyprus Hydrocarbon Company, Block 12 <http://chc.com.cy/activities/block-

12/>, accessed 29 March 2018.

23

Delek Drilling, Aphrodite Gas Field

<www.delekdrilling.co.il/en/project/aphrodite-gas-field>, accessed 29 March

2018.

Delek Group, Notice of Declaration of Commerciality, (7 June 2015)

<https://ir.delek-group.com/static-files/b0c496ef-9eb8-4781-8ed7-

236281f3feba>, accessed 5 April 2018.

Delek Group, Submission to the Government of Cyprus of the Proposed

Outline Development Plan of the Aphrodite Reservoir, (11 June 2015)

<https://ir.delek-group.com/static-files/98485206-6f2f-480a-b634-

50939375756d>, accessed 5 April 2018.

Eni, Eni announces a gas discover Offshore Cyprus, (8 February 2018)

<

www.eni.com/docs/en_IT/enicom/media/press-release/2018/02/PR_Eni_Cypr

us_Calypso.pdf > accessed 27 March 2018.

Eni.com, Zohr: production underway in record time, (December 2017)

<https://www.eni.com/en_IT/operations/upstream/exploration-model/zohr-

egypt.page>, accessed 20 April 2018.

Enipedia, Eni’s activities in Cyprus, ‘Eni Cyprus Limited’

<www.eni.com/enipedia/en_IT/international-presence/europe/enis-activities-

in-cyprus.page>, accessed 10 April 2018.

ExxonMobil, Agreement signed to explore offshore Cyprus, (2018)

<

http://corporate.exxonmobil.com/en/company/multimedia/the-lamp/agreement

-signed-to-explore-offshore-cyprus>, accessed 8 April 2018.

Noble Energy, Operational Areas, (December 2017)

<www.nblenergy.com/fact-sheet>, accessed 28 March 2018.

Shell, Shell General Business Principles, ‘Shell International Limited’ (2014)

<

www.shell.com/promos/sgbp-english/_jcr_content.stream/1519770430488/45

45bab791582e4b0fda03a2277f8440add9d15b2790005e3a82381956b002b0/

shell-general-business-principles-2014.pdf?> accessed 27 March 2018.

Shell Global, Shell Launches LNG Outlook 2018, ‘’Royal Dutch Shell plc’

(2018) <www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-

gas-lng/lng-outlook.html>, accessed 5 April 2018.

24

Shell Investors’ Handbook 2012-2016, Additional Integrated Gas Data,

‘Royal Dutch Shell plc’ (2017)

<http://reports.shell.com/investors-handbook/2016/data/lng-and-gtl.html>,

accessed 5 April 2018.

News agencies reports

Anastasiou, Angelos, Vassilikos energy hub to host floating LNG facility,

‘CyprusMail Online’ (14 September 2017)

<http://cyprus-mail.com/2017/09/14/vassilikos-energy-hub-host-floating-lng-

facility/>, accessed 21 April 2018.

BBC News, Cyprus bailout: Deal reached in Eurogroup talks, (25 March

2013) <www.bbc.co.uk/news/world-europe-21916102>, accessed 28 March

2018.

Benmeleh, Taacov; Rakteem Katakey, Shell to Mull Buying Israel, Cyprus

Gas for Egypt Plant, ‘Bloomberg’ (20 August 2017)

<www.bloomberg.com/news/articles/2017-08-20/shell-is-said-to-mull-buying-

israeli-cyprus-gas-for-egypt-plant>, accessed 30 March 2018.

Bomey, Nathan, Shell completes $53B deal for BG Group, ‘USA TODAY’

(15 February 2016) <www.usatoday.com/story/money/2016/02/15/royal-

dutch-shell-bg-group/80403694/>, accessed 2 April 2018.

Cohen, Tova; Rabinovich, Ari, Leviathan gas field developers approve $3.75

billion investment, ‘Reuters’ (23 February 2017) <www.reuters.com/article/us-

israel-natgas-leviathan/leviathan-gas-field-developers-approve-3-75-billion-

investment-idUSKBN1620OS>, accessed 14 April 2018.

Corkhill, Mike, Eastern Mediterranean gas discoveries redefine LNG playing

field, ‘LNG World Shipping’ (28 March 2018)

<www.lngworldshipping.com/news/view,eastern-mediterranean-gas-

discoveries-redefine-lng-playing-field_51240.htm>, accessed 5 April 2018.

Cyprus Daily, Israeli demands for “Aphrodite” field are unreasonable reveals

Government source, (15 March 2018)

<http://english.cyprustimes.com/2018/03/15/israeli-demands-for-aphrodite-

field-are-unreasonable-government-sources-tell-cna/>, accessed 22 April

2018.

25

Egypt Oil & Gas, Egyptian Cabinet Approves Amendments in Gas Law, (21

February 2018) <http://egyptoil-gas.com/news/egyptian-cabinet-approves-

amendments-in-gas-law/>, accessed 3 April 2018.

Ellinas, Charles, East Mediterranean – a mixed bag, ‘Petroleum Economist’

(12 December 2017)

<www.petroleum-economist.com/articles/upstream/exploration-production/

2017/east-mediterranean-a-mixed-bag>, accessed 26 April 2018

Energy Egypt, Egypt, Cyprus to link Aphrodite gas field with Idku, Damietta

LNG plants, (25 March 2018) <https://energyegypt.net/2018/03/25/egypt-

cyprus-to-link-aphrodite-gas-field-with-idku-damietta-lng-plants/>, accessed 5

April 2018.

Energy Egypt, Production from Shell’s Burullus gas field rises to 526 mmcf/d

in past year, (5 September 2018) <https://energyegypt.net/tag/burullus-field/>,

accessed 28 March 2018.

GCC, Qatar – Gulf crisis: All latest updates, ‘Al Jazeera News’ (2018)

<www.aljazeera.com/news/2017/06/qatar-diplomatic-crisis-latest-updates-

170605105550769.html>, accessed 26 April 2018.

Globes, BG partners with Noble, Delek in Cyprus’s Aphrodite, (23 November

2015) <www.globes.co.il/en/article-bg-partners-with-noble-energy-delek-in-

cypruss-aphrodite-1001083290>, accessed 1 April 2018.

Khatinoglu, Dalga; Shaban Ilham, EU, Egypt sign Energy MoU, ‘Natural Gas

World’ (23 April 2018) <www.naturalgasworld.com/eu-egypt-sign-mou-

60631?#signin>, accessed 26 April 2018.

LNG World News Staff, Cyprus, Egypt sign gas supply deal, ‘LNG World

News’ <www.lngworldnews.com/cyprus-egypt-sign-gas-supply-deal/>,

accessed 21 April 2018.

Offshore Energy Today, BG scoops Aphrodite discovery stake,

<www.offshoreenergytoday.com/bg-scoops-aphrodite-discovery-stake-

cyprus/>, accessed 2 April 2018.

Offshore Energy Today Staff, Report: Eni, Total in large gas discovery

offshore Cyprus, ‘Offshore Energy’ (5 February 2018)

<www.offshoreenergytoday.com/report-eni-total-in-large-gas-discovery-

offshore-cyprus/>, accessed 29 March 2018.

26

Orphanides, Stelios, Lakkotrypis confirms Shell’s interest to buy Cypriot gas,

‘BusinessMail’ (13 March 2018) <http://cyprusbusinessmail.com/?p=60873>,

accessed March 27 2018.

Powell, William, The rapid rise of Zohr output is on track to end Egypt’s

reliance on LNG imports this year, ‘Natural Gas World’ (26 April 2018),

<www.naturalgasworld.com/eni-ramps-up-egypts-zohr-field-60720?#signin>,

accessed 26 April 2018.

Rabinovitch, Ari, Israeli energy firms Delek Drilling, Avner Oil to finally

merge, ‘Reuters’ (17 May 2017) <www.reuters.com/article/us-delek-drill-

avner-oil-expl-m-a/israeli-energy-firms-delek-drilling-avner-oil-to-finally-

merge-idUSKCN18D15G>, accessed 2 April 2018.

Reuters Staff, With new gas deals, Egypt closes in on energy hub goal,

‘Reuters’ (28 December 2017)

<https://af.reuters.com/article/africaTech/idAFL8N1O54ES>, accessed 5

April 2018.

Reuters Staff, Cyprus president says Total, Eni to start drilling Block 6 by

early 2018 -Le Figaro, ‘Reuters’, (6 November 2017)

<www.reuters.com/article/energy-cyprus-drilling/cyprus-president-says-total-

eni-to-start-drilling-block-6-by-early-2018-le-figaro-idUSL5N1NC5VP>,

accessed 8 April 2018.

SigmaLive, Disputes between Israel and Cyprus over Aphrodite reservoir, (23

November 2015) <www.sigmalive.com/en/news/energy/137951/disputes-

between-israel-and-cyprus-over-aphrodite-reservoir>, accessed 22 April 2018.

Smith, Hannah Lucinda; Carassava, Anthee, Turkish fury as Cyprus allows

Total to drill for offshore gas, ‘The Times’ (12 July 2017)

<www.thetimes.co.uk/article/turkish-fury-as-cyprus-allows-total-to-drill-for-

offshore-gas-vc98l8cgh>, accessed 27 March 2018.

The Oil & Gas Year, Eni, Total in Cyprus find: reports, (5 February 2018)

<www.theoilandgasyear.com/news/eni-total-in-cyprus-find-reports/>,

accessed 27 March 2018.

Other online reports

27

Baconi, Tareq, Pipelines and Pipedreams: How the Eu can support a regional

gas hub in the Eastern Mediterranean, ‘European Council on Foreign

Relations’ (21 April 2017)

<

www.ecfr.eu/publications/summary/pipelines_and_pipedreams_how_the_eu_c

an_support_a_regional_gas_hub_in_7276>, accessed 24 April 2018.

Cyprus Profile, Declaration of Aphrodite gas field commerciality,

<www.cyprusprofile.com/en/articles/view/declaration-of-aphrodite-gas-field-

commerciality>, accessed 4 April 2018.

Cyprus Profile, Cyprus: An energy hub of attraction, (24 January 2016)

<www.cyprusprofile.com/en/articles/view/cyprus-an-energy-hub-of-

attraction>, accessed 19 April 2018.

Deloitte, Oil & Gas in Cyprus: Where potential lies, ‘Deloitte Limited’ (2018)

<www2.deloitte.com/content/dam/Deloitte/cy/Documents/energy-resources/

oil-and-gas/CY_EnergyAndResources_OilAndGas_Noexp.pdf>, accessed 8

April 2018.

Eurostat, EU imports of energy product – recent developments, (April 2018)

<

http://ec.europa.eu/eurostat/statistics-explained/index.php/EU_imports_of_ene

rgy_products_-_recent_developments>, accessed 24 April 2018.

MEES, Shell Recommits To Egypt With Plans To Double Offshore Output, (23

March 2018) <www.mees.com/2018/3/23/corporate/shell-recommits-to-egypt-

with-plans-to-double-offshore-output/47a18530-2eba-11e8-9c75-

fb68f6d00453>, accessed 5 April 2018.

Shoham, Vassiliko Port, ‘Shoham Cyprus Ltd’

<www.shoham.com.cy/content/vassiliko-port>, accessed 24 April 2018.

Online images

Delek Drilling

(2018), <www.delekdrilling.co.il/sites/default/files/styles/full_image/public/

media/image/field_sidebar_image/20170309_Cyprus_Blocks.png?

itok=crcczmnw> [image].

28

Mondialisation.ca (2015), <www.mondialisation.ca/the-geopolitics-of-oil-and-

gas-pipelines-in-the-middle-east/5492595> [image].

29