Eni Says Kronos Output Will Hit 500 Million Cubic Feet a Day, With Most Gas Headed to Europe

Nicosia, Cyprus. Production from the Kronos gas field is set to total 500 million cubic feet per day, according to Guido Brusco, chief operating officer of global natural resources at Italian energy company Eni. He spoke on Monday, after Eni signed contracts worth $1.8 billion for building the infrastructure needed to produce Cypriot natural gas.

From Cyprus to Egypt and onward

Brusco told the Cyprus Mail that the gas will be sent to Egypt, where it will be processed and liquefied. He estimated that liquefaction will yield roughly 40 cargos of liquefied natural gas a year. These cargos, he said, will very likely be sold on the European market.

Revenue and Egypt’s share

Brusco declined to say how much money the production could generate. He did disclose that Egypt, where the liquefaction will take place, will be entitled to buy some of the volumes at market conditions. He added, however, that “the large majority of the volumes will be sold to Europe”.

Pricing

Brusco explained that gas in Europe is traded through the Title Transfer Facility, a Dutch virtual trading point that sets the continent’s benchmark LNG price. For that reason, he said, the sale price will follow market conditions in 2028, the year Eni expects production to start.

Buyers and sales strategy

Asked whether Eni is already talking to potential buyers of Kronos gas, Brusco said projects of this kind do not necessarily require a firm buyer. Gas can also be sold at the European hub, he said, and Eni has regasification capacity in Italy. This would let the company bring the gas to the Italian market and sell it on the spot market.

Spot selling means the gas is sold at the price prevailing at that moment to any party active in the market, with no long-term buyer or agreement in place.

Brusco reiterated that “we do not necessarily need to have a firm buyer”. He added that Eni is seeking to place part of the volumes under a long-term contract, which he said would be handled within a wider portfolio strategy.