“Aphrodite” gas field partners to submit an updated development plan after a breach of contract notice

Partners of the consortium for the “Aphrodite” gas field in block 12 of the Cypriot Exclusive Economic Zone said they intend, in the coming days, to submit to the Cypriot government for approval an “updated development plan”, on the basis of the previous development and production plan, as approved by the government, following a notice for breach of contract sent by the Cypriot Minister of Energy.

NewMed Med Energy, one of the partners of the gas field consortium, said in a 26 August press release issued to the Tel Aviv Stock Exchange said that, Chevron, the gas field’s operator, received on 25 August “from the Minister of Energy of the Cypriot government 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.”

The milestone referred to in the letter concerns the performance of Front-End Engineering Design (FEED) which was determined in the Production Sharing Contract.

“In this context, it is noted that the partners in the Aphrodite Reservoir intend to submit, in the coming days, for the Cypriot government’s approval, an updated plan for the development of the Reservoir, which was prepared based on the original development and production plan, as previously approved by the Cypriot government,” NewMed added.

The partners in the Aphrodite Reservoir and their holding rates are as follows: Chevron Cyprus Limited 35%, Operator, BG Cyprus Limited (Shell) 35% and The Partnership (NewMed Energy) with 30%.

On 30 April, Cypriot Energy George Papanastasiou sent a letter to Chevron stating that its proposal for “optimized development plan” for the gas field was not acceptable and requested from the partners to “to promptly confirm in writing their unconditional consent to commence performance of the FEED within 6 months.”

Discussions over the development of Aphrodite believed to hold to up to 4.5 trillion cubic feet of natural gas, began in August 2023, when the government rejected a revised development plant submitted by Chevron, suggesting that the development of the gas field should proceed according to the original development plan submitted by Noble Energy (the previous operator) in 2019.

Government sources told CNA that the Ministry’s actions are taken in the context of the contract’s provisions. The government’s primary concern is to implement its energy programme in the framework of the contracts signed by the Republic. The same sources also recalled that the Republic has repeatedly asked from the gas field’s consortium to implement the development plan as has been agreed in 2019.

(Source: CNA)