Egypt's Continued Negotiations with Cyprus a Good Omen for Israel?
Egypt has frozen natural gas negotiations with Israel but in parallel, told the Cypriot government that negotiations with Cyprus are to continue.
Egypt froze negotiations with Israel on Sunday after an ICC arbitration panel awarded Israel Electric Corp (IEC) compensation of $1.76 billion after Egyptian gas producers cancelled bilateral gas agreement three years ago.
The Cypriot Energy Minister Georgios Lakkotrypis said Monday that Egypt is still interested in buying Cypriot natural gas, according to a report in FG News. "Negotiations on the gas purchase are continuing on a commercial level," Mr Lakkotrypis was quoted as saying.
This should be good news for Noble Energy and Delek Group, which control the Cypriot Aphrodite and Israeli Leviathan gas fields.
Those two gas fields are close to each other and if Egypt is seriously looking to purchase natural gas from Aphrodite, then in order to make the development profitable, the Leviathan field, five times the size of Aphrodite, will have to be developed as well. This could be leverage that the Noble/Delek consortium will be able to use in their negotiations with Egyptian customers and officials in their capacity as the owners of Aphrodite.
However, for that to happen, Israel and Cyprus have to reach a unitization agreement in order to share the resources. It is assumed that Aphrodite reserves penetrate into Israel's EEZ. However, deciding how deep the penetration is and how much of the natural gas is in Israel's EEZ will be problematic and dependent mainly on political and diplomatic negotiations, though commercial interests and conflict of interest are to characterize the negotiations.
It should be noted that the penetration of Aphrodite into Israel's EEZ is in the Yishai license, which belongs to a different group of investors than the Noble/Delek consortium.
As yet, after three meetings over the last five months between Israeli Prime Minister Benjamin Netanyahu and Cypriot President Nicos Anastasiades, no breakthroughs have been achieved. Their next meeting should take place next month in Nicosia, Cyprus, at a tripartite summit meeting with also Greek Prime Minister Alexis Tsipras.
Ya'acov Zalel