Israeli-Cypriot gas talks disappoint Ishai’s partners


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Talks began last week between the two groups, which own two parts of the offshore Aphrodite gas field. The largest portion is in Cypriot economic waters and is owned by Delek Drilling LP (TASE: DEDR.L), Chevron and Shell. The smaller portion, known as the Ishai gas field, is located in Israeli economic waters and is owned by four Israeli companies – Israel Operation, Namax Oil and Gas, Petroleum Services Holding (PSH) and Eden Energy. The fact that the same field extends across the economic waters boundaries of the two countries requires economic arrangements in this regard. Negotiations begin with Ishai Partners, indignant over the Israeli government and the Energy Ministry. Ishai’s partners claim that they have not received full Israeli support for their demands to jointly develop the field, which would bring Israel revenues from the gas profits, rather than seeking a one-time compensation. Without the approval of the Israeli companies, which have a small stake in this field, the Cypriots, in part, bear responsibility for themselves, are unable to develop their largest share in this field. Israel and Cyprus signed a cooperation agreement in 2010 dealing with any discoverable gas fields in the Mediterranean, which includes a clause on offshore fields that extend across the maritime boundaries. In 2012, it turned out that the Ishai gas field was a continuation of the Cyprus gas field. Since then, partners in both areas have struggled to come to an agreement. The delay in resolving the problem led to unilateral actions by the partners on the Cypriot side, who announced plans to develop the field in 2019, and an agreement with Egypt to extend a gas pipeline between the Aphrodite field and the giant marine liquefaction plant from Egypt. , Which belongs to Shell. In response, Udi Adir, director general of the Israeli Ministry of Energy, sent a letter to Aphrodite’s partners warning them not to start developing the field until the talks between Israel and Cyprus ended. The message caused a diplomatic storm and the Israeli ambassador to Cyprus was summoned to a meeting and reprimanded by the Cypriot government. After that, the newly appointed Cypriot Energy Minister Natasha Pelides decided to solve the problem and remove obstacles to the field’s development. Last month, I reached an agreement with Israeli Energy Minister Yuval Steinitz on the outlines of speedy negotiations to resolve the issue, whereby talks will begin without delay between gas field partners on both sides of the border, to agree on how Israeli companies will be compensated for their share in the field. Related, Chevron allows Tamar partners to sell the gas separately, with Chevron becoming Tamar, the operator of Leviathan’s gas fields. This implies a loss of about 3 billion shekels in tax revenues, if the gas price is calculated at $ 6 per thermal unit, although the price of gas has since decreased dramatically. Yishai’s Israeli partners claim that Israel left them alone to confront major energy companies such as Chevron. Shell Resolving the conflict is a Cypriot national priority, the Israeli Ministry of Energy rejects these accusations and indicates that Aphrodite’s partners have threatened to stay away from developing the field, if Israeli approval is not forthcoming. With Israeli companies, the Ministry of Energy says that the Yishai domain is practically not worth developing separately. The prospect of continuing the separation of the smaller common field, despite the currently proposed plan, would allow Israel to present its position, even before international arbitration if necessary, while the State of Israel reserves the right to agree or not agree to any future settlement. Cyprus considers resolving the Aphrodite dispute a national priority, which will allow the development of the largest gas field in its national waters. Progress in the talks can be attributed to Pelides, who is determined to resolve the conflict. The Cyprus Ministry of Energy said: “In a very short period, and through fruitful dialogue between senior officials in the ministries, we succeeded in achieving great progress on all issues including the issue of Aphrodite-Ishai. Agreement on the framework of the talks will achieve the promotion of a solution in the shortest time possible and allow Developing the domain, while preserving the rights of the countries and companies involved. ” However, Chevron’s strength and prestige in the region’s gas field are flying a warning flag. Through its acquisition of Noble Energy, Chevron has become the main partner in both the Tamar and Leviathan gas fields as well as the Cyprus Aphrodite field and has major supply contracts to the Israel Electric Corporation (IEC) (TASE: ELEC.B22) among others. Major organizations in Israel and the region. Chevron is also planning to extend a gas pipeline to Egypt from Cyprus, which will likely serve Israeli fields as well, since there would be no economic sense in laying two parallel gas pipelines. Chevron is also planning to bid in dozens of other tenders in the coming years to obtain concessions in the economic waters of Israel, Lebanon and other countries in the Eastern Mediterranean. There are concerns that this would give Chevron too much power in the region, especially over Israeli regulators. The Department of Energy sees the cup half full. Chevron has completely smashed the remnants of the Arab boycott, which previously prevented large international energy companies from doing deals in Israel and has become an important player on the international stage. In the first Israeli confrontation with Chevron, over the suspension of gas supplies to the International Hydroelectric Committee due to the prices imposed, Chevron backed down and agreed to lower prices for future contracts. Chevron’s interest in milder policies toward the IEC and future tariffs should create a more comfortable atmosphere with the Israeli regulator, regarding future bids while reaching a settlement on the pipeline issue to Egypt, requires Israel’s approval. The Energy Department said that an agreement on this will only be reached if Chevron is committed to allowing the use of the gas pipeline to competing companies from competing fields in the region. Chevron said the company is happy to enter Israel and support the country’s strategy to develop energy resources for the benefit of Israel and the entire region. “With more than 141 years of operations, we know the value of partnering, establishing long-term networks of relationships and mutual benefits, and we intend to do so in Israel and all the countries in which we operate in the region.” Posted by Globes, Israel business news – en.globes.co.il – May 2, 2021 © Copyright Globes Publisher Itonut (1983) Ltd. 2021


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