Analyst warns Chevron tariff demand could leave Cyprus with minimal Aphrodite profits
Energy analyst Charles Ellinas says Chevron’s proposed $3 per mmbtu pipeline tariff could sharply reduce Cyprus’s earnings from future Aphrodite gas sales.
Nicosia, Cyprus. Energy analyst Charles Ellinas warned on Monday that accepting Chevron’s latest tariff demand could leave Cyprus earning almost nothing from future sales of Aphrodite gas.
Higher charge for Egyptian pipeline section
Chevron, which operates Aphrodite, has recently requested a tariff of $3 per mmbtu (million British Thermal Units) for access to a section of a proposed pipeline linking the reservoir in Cyprus’s waters with Egypt’s coast.
The charge would apply to the stretch within Egypt’s waters, owned by Chevron, its partners and Egypt’s state-owned corporation E-Gas. Cyprus has no participation in the proposed pipeline.
Chevron’s earlier request was understood to have been $1 per mmbtu. A recent report in MEES (Middle East Economic Survey) said the company had raised that figure to $3.
Concerns over Cyprus’s returns
Ellinas first raised his concerns with the Cyprus News Agency. Speaking subsequently to the Cyprus Mail, he said government acceptance of the proposed charge would reduce Cyprus’s potential profits from Aphrodite to a minimum.
“To the point that it would hardly be worth it for Cyprus,” he said.
According to Ellinas, the government has asked Chevron to reconsider, as far as he knows. He added, however, that all the negotiating leverage lay with Chevron.
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