Cronos FID Opens New Cyprus Gas Era

Q: After years of anticipation, delays and unsuccessful attempts to bring Cyprus’ offshore gas to market, the Cronos project has now reached FID (MEES, 31 July). What does this milestone mean for Cyprus’ energy sector and for the wider economy?

A: The Final Investment Decision on Cronos is indeed a historic milestone for Cyprus. For the first time, an offshore natural gas discovery in our Exclusive Economic Zone has progressed all the way from exploration to commercial development. It confirms that Cyprus can move beyond discovering resources and begin producing them.

Equally important, Cronos demonstrates that our strategy of working with international energy companies and leveraging regional infrastructure can deliver tangible results. By using existing facilities in Egypt, the project has achieved a competitive development schedule, with first gas expected in 2028. The Government has an excellent relationship with the consortium of Block 6, Eni (the Operator), and its partner, TotalEnergies.

Beyond the direct and indirect economic benefits, e.g., job openings, increase of economic activity in the energy industry and attracting new investments, this is strategically significant because it establishes Cyprus as a natural gas producer, strengthens regional energy cooperation and Cyprus’ geopolitical position, and contributes to Europe’s efforts to diversify energy supplies.

Q: How significant do you expect Cronos revenues to be for the state, and when should Cyprus begin to see meaningful economic benefits?

A: At this stage, I think it would be premature to focus on specific revenue numbers as the benefits for Cyprus expand beyond this. Revenues will depend on many factors, including production performance, gas prices and market conditions over the life of the project.

What we can say with confidence, is that Cronos moves Cyprus into a new phase. The first meaningful economic benefits will begin when production starts and revenues begin flowing, but the broader value extends beyond direct revenues. It includes, among others, investment, technical expertise, international confidence in Cyprus as an energy destination, and the creation of a platform for future developments.

Q: Cronos has moved from discovery to FID remarkably quickly, with Eni able to use existing infrastructure in Egypt. How did the government satisfy itself that the approved Development and Production Plan maximizes the field’s long-term recovery and value for Cyprus, rather than simply getting first gas as quickly as possible?

A: Speed was certainly an advantage of the selected development concept, but it was not the only consideration. The Government’s responsibility is to ensure that any approved development plan is technically sound, economically viable and consistent with maximizing value for the Republic over the life of the resource.

The Development and Production Plan was subject to a detailed review process before approval. The fact that existing infrastructure in Egypt can be utilized significantly improves project economics and accelerates revenues, but the development concept also had to demonstrate that it could efficiently recover the resource and provide an acceptable return over the field’s lifetime.

Importantly, the approved plan also provides a framework for future optimization should additional resources or opportunities emerge during the production period. This is a phased development.

Q: Did the ministry commission or review any independent reservoir analysis before approving the DPP, or was it satisfied with the operator’s assessment?

A: The Ministry’s evaluation was not based simply on accepting conclusions at face value. We worked through the established regulatory review process and assessed the technical and commercial information submitted by the operator.

As is normal in projects of this scale, the Ministry and its advisors examined the subsurface, development and economic assumptions before approval. Ultimately, the Ministry was satisfied that sufficient technical information existed to support approval of the development plan and progression to FID.

Q: Using Egyptian infrastructure allows Cronos to be developed quickly, but Cyprus’ share of the value generated by the gas will be reduced by transportation, processing, liquefaction and shipping costs. Having approved the DPP, are you satisfied that Cronos still delivers an attractive return for Cyprus after all of those deductions?

A: Any development concept involves trade-offs. Using Egyptian infrastructure means there are transportation, processing and liquefaction costs. However, it also dramatically reduces capital expenditure, execution risk and time-to-market.

The key question is not whether those costs exist, but whether the overall project creates value for Cyprus after taking them into account. The Government’s assessment is that it does.

The alternative of waiting for entirely new infrastructure would likely have delayed monetization significantly and introduced additional commercial and financing challenges, which could make the project non-feasible. In the current market environment, bringing gas to market earlier through proven infrastructure can be an important source of value in itself.

Q: How robust are the project economics if gas prices are materially lower than assumed, and did the ministry undertake a downside analysis before approving the development?

A: Commodity markets are inherently cyclical and any major project must be capable of withstanding periods of lower prices.

For that reason, project economics are never assessed on a single price outlook. A range of market scenarios is considered as part of the overall evaluation process. What gave us confidence is that Cronos combines relatively low development costs with a fast-track pathway to market, characteristics that generally improve resilience across different market environments.

No project is completely insulated from market volatility, but we are satisfied that the project remains robust under a range of reasonable scenarios.

Q: Moving on to Cyprus’ other advanced gas project. Chevron is expected to take FID on Aphrodite next year, with first gas targeted for 2031 (MEES, 24 July). After changes to the development concept over the past two years, are you confident that Aphrodite remains sufficiently competitive within Chevron’s global portfolio to secure FID on schedule?

A: We remain encouraged by the progress being made. The project has advanced through key stages of engineering and commercial negotiations, and the current timetable continues to target FID in 2027 and first gas around 2030-2031.

Large offshore developments inevitably evolve as engineering work progresses and companies seek to optimize cost, schedule and risk. What matters is that the partners remain engaged and continue advancing the project.

Chevron is one of the world’s leading energy companies, and together with its partners it has the technical capability and financial strength to successfully deliver a project of this scale. The Government has an exceptional relationship with the Aphrodite JV.

Q: Chevron initially proposed removing the floating production unit before subsequently reinstating it (MEES, 21 February 2025). Did the ministry interpret those changes primarily as efforts to improve project economics, and are you now confident that the project has cleared the company’s internal investment requirements?

A: We viewed the various concept refinements as part of the normal maturation process of a major offshore development.

As projects move from conceptual design into more detailed engineering, companies continuously reassess capital efficiency, operational performance and risk. What is important is that the consortium now has a development concept that continues to progress through the required milestones.

The fact that the project remains on track towards FEED completion and a subsequent investment decision is, in our view, an encouraging indication of continued commitment from the partners.

Q: The unresolved Ishai issue with Israel has been hanging over Aphrodite for years (MEES, 23 January). Where do discussions with Israel now stand, and is there a clear roadmap for resolving the issue without affecting Aphrodite’s development timetable?

A: Discussions with Israel are at an advanced stage and continue to be constructive. Both sides recognize the importance of resolving the issue in a manner that is fair, commercially reasonable and compatible with the continued development of Aphrodite. Aphrodite’s development timetable is not linked to the Ishai issue; rather it is being treated as a parallel track. The development plan has its own technical, commercial and financing workstreams, and we do not see the bilateral discussions as a reason to delay progress towards FID.

Indeed, in the last couple of months important progress has been made on the commercial parts of the discussions as result of the contribution of the governments and the companies.

While negotiations have taken time, progress has been made and there remains a shared objective of reaching a mutually acceptable outcome. In practical terms, the roadmap is clear: finalize the intergovernmental agreement, and finally appoint the expert for the determination of the compensation to the Israeli side.

Q: Are you confident that the dispute can be resolved before it becomes a constraint on Aphrodite’s FID or first-gas schedule?

A: Our objective is to resolve the matter as soon as possible. At the same time, we remain focused on ensuring that work on Aphrodite continues to advance.

The discussions are sufficiently mature, the parameters are well understood, and the political will exists on both sides to avoid allowing this long-standing issue to become a constraint on Aphrodite’s FID or first-gas schedule.

Based on the current trajectory, we do not see the Ishai discussions preventing ongoing project maturation. Naturally, a final resolution would provide additional certainty, and we continue to work closely with all relevant stakeholders toward that objective.

Q: ExxonMobil has multiple discoveries offshore Cyprus, potentially large enough to support more than one development concept (MEES, 3 July). Is the government still actively promoting Egypt as the preferred route for monetizing those discoveries, or is it encouraging ExxonMobil to assess alternatives such as FLNG and domestic gas supply on an equal footing?

A: Our approach is not to prescribe a single development solution. Rather, we encourage license holders to evaluate the technically and commercially optimal pathways for bringing resources to market. We have an excellent relationship, and we are in direct dialogue with ExxonMobil and its partner QatarEnergy regarding monetisation options.

Egypt is an attractive option because it offers existing infrastructure, a large domestic market and immediate commercialization opportunities. However, we have always said that all viable options should be assessed on their merits.

The important point is that Cyprus wants to maximize long-term value while ensuring projects are commercially realistic and capable of being delivered.

Q: Has the government undertaken — or asked the companies to undertake — a comparative assessment of the total value Cyprus could retain through different options, including Egyptian exports, FLNG and domestic utilization?

A: Yes, we expect development concepts to be supported by rigorous technical and commercial analysis. The consortium is currently evaluating various development options, including the FLNG option.

Different options can offer different advantages. Some may accelerate cash flow; others may maximize resource recovery or create additional domestic benefits. The role of Government is to ensure that decisions are informed by robust evaluation and aligned with the national interest.

As additional discoveries progress toward development, we expect those assessments to continue evolving alongside market conditions and technological advancements.

Q: Recent regional conflicts have demonstrated how quickly energy security can become a strategic issue (MEES, 4 July 2025). Yet Cyprus still relies heavily on imported oil products for power generation while its offshore gas developments are largely geared towards exports. Has the government placed too much emphasis on monetizing Cyprus’ gas through Egypt at the expense of developing a coherent domestic energy strategy?

A: I do not see this as a choice between exports and domestic energy security. Cyprus needs both. Commercializing offshore gas through export projects provides the economic foundation that makes development possible, while energy security remains one of the pillars of our national energy strategy. Cyprus continues to face significant energy-security challenges due to its dependence on imported fossil fuels and its electrical isolation from the European energy grids. For this reason, our objective is to reduce dependence on imported oil, increase the share of renewables, develop adequate storage and system flexibility, advance electricity interconnections and diversify our sources of supply, so as to ensure reliable and affordable energy for our citizens, industries and economy while minimizing environmental impacts.

Our energy-security strategy includes the use of natural gas in electricity generation and the incorporation of modern, flexible conventional units, in parallel with the increasing share of renewables. The development of renewable projects is now being combined with adequate energy storage capacity, including grid-forming technologies, while the development of electricity interconnections will help overcome the structural limitations inherent to an isolated system. Our strategy is therefore broader than hydrocarbons alone: it is about creating a diversified, resilient and sustainable energy system that supports both domestic security of supply and the responsible monetization of Cyprus’ offshore resources.

Q: Can Cyprus really claim to have achieved energy security if, ten years from now, it is still importing fuel for electricity generation while exporting most of its own natural gas?

A: Energy security does not mean producing every unit of energy domestically. It means having access to reliable, diversified and affordable energy supplies.

Ten years from now, I would expect Cyprus to have a significantly different energy mix than today, with much greater penetration of renewables, energy storage, interconnection capacity and natural gas. Offshore gas developments can contribute to that transition, but they are only one part of the overall strategy.

Q: Cyprus is putting more of an emphasis on battery storage, while the Great Sea Interconnector (GSI) continues to progress under a revised ownership structure (see p18). Has the government’s view changed on the respective roles of storage and interconnection, and what has driven the increased focus on batteries (MEES, 10 July)?

A: Our view has not changed. Storage and interconnection are complementary rather than competing investments.

Battery storage addresses a challenge that Cyprus faces today. It allows us to capture renewable energy that would otherwise be curtailed and improve grid flexibility in the near term.

Interconnection addresses a different challenge. It increases system resilience, enables cross-border electricity trading and supports the longer-term integration of larger volumes of renewable energy.

Because they solve different problems, we continue to see value in both.

Q: How do these two investments fit together in the government’s longer-term vision for Cyprus’ electricity mix? Should consumers and investors expect the first major change to be a reduction in renewable-energy curtailment through storage, a significant increase in battery deployment, or tangible construction progress on the GSI?

A: Consumers and investors should expect progress on several fronts.

Battery storage is likely to deliver some of the earliest visible benefits because it can directly reduce renewable-energy curtailment and improve system performance over the next few years.

At the same time, the Great Sea Interconnector remains strategically important because it can fundamentally transform Cyprus from an isolated electricity system into one connected to the wider European network.

In the longer term, a successful energy transition will require both forms of infrastructure working together.

*Interview conducted in Nicosia on 18 August with East Mediterranean Editor Peter Stevenson.