Cyprus Aims to Begin Supplying Natural Gas to Europe by 2028

European consumers are expected to receive natural gas from an undersea deposit off Cyprus by March 2028, according to the island nation's energy minister, Michael Damianos. He indicated that the East Mediterranean is rapidly emerging as a crucial alternative energy source for European countries seeking to diversify their supplies amidst geopolitical instability in Ukraine and the Middle East.

Partners TotalEnergies of France and Italy's Eni have made a definitive decision to proceed with the development of the Cronos natural gas field, located off Cyprus' southern coast. This project marks the first instance of gas from East Mediterranean deposits being supplied to European markets. Damianos emphasized the strategic importance of Cyprus serving as an alternative gas source during a period of conflict.

The planned timeline involves commencing work on a pipeline connecting Cronos to Egypt's Zohr natural gas deposit later this year. This pipeline construction is expected to take approximately 18 months. Following completion, the gas will be transported to the Damietta processing facility on Egypt's northern shore for liquefaction and subsequent shipment to Europe via vessel.

This approach, piping Cronos gas to Egypt for processing, is considered the most economically feasible option, with an estimated cost of around $2 billion, or half the expense of developing other gas fields within Cypriot waters due to its proximity to existing infrastructure. While the agreement designates all of Cronos's more than 3 trillion cubic feet of gas for export to Europe, a provision allows for approximately one-fifth of this volume to meet Egypt's domestic energy demands.

Damianos noted that Cronos represents a relatively small reserve and highlighted that the primary significance for Cyprus lies in becoming a producer and initiating gas exports, rather than substantial financial gain. Cyprus has identified several other natural gas deposits within its Exclusive Economic Zone. The Glaucus and Pegasus fields are estimated to jointly hold 6.9 trillion cubic feet, with development expected to begin by 2033 by ExxonMobil and its partner QatarEnergy. ExxonMobil is also reportedly planning to expand its exploration activities off Cyprus and may receive an additional license for hydrocarbon searches.

The Aphrodite field, discovered approximately 15 years ago and holding an estimated 5.6 trillion cubic feet, is undergoing development by a Chevron-led joint venture. A final decision on this field's development is anticipated in the summer of 2027, with a pipeline planned to connect directly to Egyptian facilities to serve that country's domestic needs. A portion of the Aphrodite field extends into Israeli waters, and an arbitration process is underway to determine the allocation percentage for Israel, with a decision expected next month.

In parallel, Damianos also highlighted the Great Seas Interconnector project, an electricity cable intended to link the power grids of Cyprus and Israel with Europe's. This project is viewed as a key component for the India-Middle East-Europe Economic Corridor (IMEC) initiative. The project's final cost is currently under review, with a report from the European Investment Bank expected in the coming months. Under an existing agreement, Cypriot energy consumers could bear up to 63% of the cable's construction costs, potentially leading to increased electricity prices. Efforts are underway to secure additional private investment and explore further European Union funding to mitigate this burden on consumers. The EU has already committed $760 million to the project.