European Energy Giants Strike Deal to Develop Gas Discovery Off Cyprus Coast

Two European energy giants, France’s TotalEnergies and Italy’s Eni, have struck a deal with Cyprus and Egypt to develop a gas discovery named after the god of time in ancient Greek mythology by exporting the natural gas from the field off the coast of Cyprus through Egypt.

TotalEnergies and Eni, partners in Block 6 offshore Cyprus, have penned a host government agreement (HGA) with the Arab Republic of Egypt and the Republic of Cyprus related to the development of the block’s gas resources. The Block 6 partners will now proceed with the Cronos development and production plan in close collaboration with Cyprus authorities.

Key Agreements and Milestones

The signing of the deal with Karim Badawi, Minister of Petroleum and Mineral Resources of the Arab Republic of Egypt, and George Papanastasiou, Minister of Energy, Commerce and Industry of the Republic of Cyprus, took place in the presence of Abdel Fattah El-Sisi, President of Egypt, and Níkos Christodoulídis, President of Cyprus. TotalEnergies also has interests in Block 11 (50%, operator), Block 7 (50%, operator), and Block 8 (40%) in Cyprus.

Julien Pouget, Senior Vice President of Middle East & North Africa, Exploration & Production at TotalEnergies, commented: “TotalEnergies is very pleased to be part of the opening of an export route through Egypt for Cyprus gas. This Host Government Agreement represents a major step in valorizing the Cyprus gas through available LNG capacities in Egypt, contributing to Europe energy security by bringing additional LNG volumes.”

According to TotalEnergies, this agreement is “a key milestone” towards the development of the Cronos gas field in Cyprus Block 6, which was discovered in 2022 using the Tungsten Explorer drillship and appraised in February 2024. The deal provides a framework allowing the Cronos gas to be processed in the existing Zohr facilities offshore Egypt and then liquefied in the Damietta LNG plant for export to European markets.

Eni’s Perspective

Eni sees the new agreement as “a concrete milestone” to establish a gas hub in the Eastern Mediterranean, capitalizing on Egypt’s existing hydrocarbon infrastructure and positioning Cyprus as a gas producer and exporter, as it outlines a comprehensive framework to enable rapid development of the Cronos gas discovery offshore Cyprus.

Claudio Descalzi, Eni’s CEO, highlighted: “This agreement paves the way to bring Cyprus’ gas to the market in a timely fashion, contributing to energy security and competitiveness of energy supply. This project leverages Egypt’s existing infrastructure, including export facilities, which are a key enabler for developments in the Region. Egypt and Cyprus reaffirm their roles in the emerging energy hub of the Eastern Mediterranean, which is set to play an increasing role in the global gas supply in the near future.”

Future Prospects and Collaborations

Furthermore, Cronos gas in place is estimated at more than 3 trillion cubic feet (tcf), with Block 6 encompassing further potential resources under exploration and appraisal, including the Zeus discovery made in 2022. While Block 6 is operated by Eni with a 50% interest, the Italian oil major also operates Block 8 and has participating interests in Blocks 7 and 11 in Cyprus.

This is one of the first two agreements between Cyprus and Egypt to begin developing Cypriot natural gas discoveries using Egyptian infrastructure, within the framework of the Ministry of Petroleum’s strategy to transform Egypt into a regional center for natural gas trade and circulation, by receiving gas produced from discoveries in the Eastern Mediterranean and directing it to the local market and re-exporting it to Europe.

Enhancing Energy Efficiency

Moreover, El-Sisi and Christodoulides witnessed the signing of an agreement between the Ministries of Petroleum and Mineral Resources, Electricity, and Renewable Energy, and the Saudi Ministry of Energy to develop an executive plan for cooperation between Egypt and Saudi Arabia, establishing a national program to improve energy efficiency in Egypt.

This entails preparing technical specifications and standards, mechanisms that ensure the implementation of energy efficiency regulations and standards, building human capacities through training programs and workshops, mechanisms for developing energy service companies and the infrastructure necessary to improve energy efficiency projects, and facilitating financing and investment mechanisms in these projects.

In addition, the establishment of a joint entity specialized in setting up and developing renewable energy efficiency projects in Egypt will also be studied in cooperation with the Saudi Tarsheed Foundation to form a joint mechanism to supervise implementation, determine targets and performance indicators to follow up on the implementation of the plan, and form technical teams responsible for each work stream.