Nicosia, Cyprus. The final investment decision by the Eni and TotalEnergies consortium to develop the Kronos natural gas field in block 6 of Cyprus’ exclusive economic zone could create an opportunity to use remaining reserves for domestic needs, energy expert Charles Ellinas said.
He told the Cyprus News Agency that the decision was an important milestone towards exporting natural gas and could pave the way for broader development of Cyprus’ offshore resources.
Production and exports
Ellinas said annual production from the Kronos field is expected to reach about five billion cubic metres of natural gas, with around four billion cubic metres primarily destined for European markets.
He said the exports would represent a small contribution to Europe, which imports around 300 billion cubic metres of natural gas annually, rather than a solution to its energy needs.
“This is certainly a historic development because, after 15 years, we are finally moving towards the process of exporting natural gas,” Ellinas said.
Egypt’s regional role
Ellinas said the exports would not make Cyprus an energy hub, arguing that Egypt would take that role because it receives natural gas from both Cyprus and Israel.
He said Israel had signed an agreement to export 20 billion cubic metres of natural gas to Egypt, about four to five times the volume expected from Cyprus. Egypt uses the gas to meet domestic needs alongside its own production or exports it, he added.
Financial impact
Ellinas said Cyprus would receive relatively limited economic benefits from the Kronos project because of financial concessions and additional risks accepted during negotiations.
“Unfortunately, Cyprus’ revenues from this project will be very low because, in order for it to proceed, Cyprus made significant financial concessions and accepted additional risks, substantially reducing the country’s benefit,” he said.