US-Israel energy partnership presents $4 billion plan to develop a natural gas field in Cyprus

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An American-Israeli energy alliance on Sunday unveiled a $4 billion initiative to develop and process the Aphrodite natural gas field, located off the coast of Cyprus. The Israeli partner, NewMed Energy, formerly known as Delek Drilling, is part of the Delek Group which holds a 30% stake in the Aphrodite field. The remaining 70% stake is equally divided between the American energy giants Chevron and Shell.

Discovered in 2011 and located about 105 miles south of the Cypriot city, Limassol, the Aphrodite gas field contains approximately 124 billion cubic meters (4.38 trillion cubic feet) of natural gas.

NewMed Energy CEO Yossi Abu said: “We updated the development plan according to the instructions of the Cypriot minister of energy, and look forward to the plan’s approval to allow swift progress in the development of the reservoir.”

“The reservoir’s development is another step in the regional collaborations that are evolving around natural gas in the Mediterranean Basin,” he added.

The new development plan includes the construction of a floating production facility above the Aphrodite reservoir. Once operational, the new facility is expected to produce approximately 800 million cubic feet daily.

The U.S. and Israeli energy partners previously signaled their intention to connect the field in Cypriot waters via a pipeline to an existing production and processing facility in Egypt.

For most of its modern history, the State of Israel was devoid of any known natural resources. However, in the early 2000s, natural gas was discovered off Israel’s northern Mediterranean coast and by 2004, Israel was producing natural gas from its own field.

Initially, the volume was moderate and primarily earmarked for domestic consumption. However, after discovering several gas fields, including the substantial Leviathan field, Israel emerged as a significant gas exporter. Consequently, Israeli natural gas royalties surged, reaching $263 million in June 2023.

Following Russia’s invasion of Ukraine in 2022, European nations signaled a willingness to reduce their energy dependence on Russian gas and began looking for alternative gas suppliers.

In May 2023, the Cypriot Energy, Commerce and Industry Ministry revealed that Cyprus and Israel were discussing the possibility of constructing a pipeline that would transport Israel's natural gas to the European market via Cyprus.

"Our objective is low-cost electricity production ... so natural gas should come from the area," said Cypriot Energy Minister George Papanastasiou.

“It will be a corridor that will exist. Instead of a pipeline, it will be a connection between Israel and Europe which can be done through Cyprus,” he added. “It could be a virtual pipeline which would link through Cyprus to the rest of Europe in liquefied form.

The Lebanese terrorist organization Hezbollah has threatened to attack Israel’s natural gas fields in the Mediterranean several times and threatened Cyprus for its political and commercial ties with Israel.

In June, Hezbollah leader Hassan Nasrallah issued an explicit threat to Cyprus, which is a member of the European Union.

“Opening Cypriot airports and bases to the Israeli enemy to target Lebanon would mean that the Cypriot government is part of the war, and the resistance will deal with it as part of the war,” Nasrallah warned.