Cooperation between Cyprus, Greece, Israel and the United States on regional energy issues is politically beneficial but does not resolve the financial challenges Cyprus faces in exploiting its hydrocarbon reserves, energy expert Charalambos Ellinas has told CNA.
Commenting on the 3+1 cooperation framework and the launch of the Eastern Mediterranean Energy Centre at the Baker Institute for Public Policy at Rice University in Houston, Ellinas described the development as significant but warned against overestimating its impact.
“It is an important development, but we must be very careful how we interpret it and what we expect it to deliver,” he said.
He characterised the initiative as “a positive political development” that brings Cyprus, Greece, Israel and Egypt closer to cooperation with the United States, adding that increased US involvement in the region is beneficial.
Ellinas also noted that the new energy centre would be useful in providing training opportunities, allowing universities, companies and semi-governmental organisations in Cyprus to send personnel to the US.
Projects driven by commercial viability
Despite the political gains, Ellinas stressed that decisions on hydrocarbon development in Cyprus rest primarily with energy companies and are based almost entirely on commercial, not political, criteria.
“If projects are not economically viable, if returns are not what companies expect, investments will not proceed,” he said.
Political gains but little profit
Referring to the Cronos field in Cyprus’ exclusive economic zone, operated by Italian energy giant Eni, he argued that the terms sought by companies would leave Cyprus with “almost no profits”, noting that global liquefied natural gas prices are likely to fall by the time exports begin.
“Companies will benefit, Cyprus will see political gains, but not economic ones,” he said, adding that the 3+1 framework “cannot help” in addressing this issue.
He also raised doubts about Chevron’s plans for the Aphrodite field, suggesting the company may seek further concessions before moving ahead.
“The problems we had remain,” he said. “What concerns me is that the government has shifted towards political gains and is making continuous concessions to companies to push projects forward. These concessions could leave us with very low financial returns.”
Call for long-term strategy
Asked about the broader political value of such partnerships, Ellinas said cooperation among the countries involved would continue regardless of hydrocarbons, extending to sectors such as security and defence.
He emphasised the need for a long-term strategic plan to ensure optimal benefits for Cyprus, warning against reactive policymaking.
“We must examine all options carefully, have a clear strategy and avoid constantly yielding to pressure from companies,” he said, adding he expects “more pressure from Chevron, possibly also from Eni and Total”.
Ellinas pointed to upcoming exploration activity by ExxonMobil in Block 5 of Cyprus’ EEZ, as well as in adjacent Egyptian blocks, as a key factor.
“If quantities are small, the company will proceed using facilities in Egypt. If there are additional discoveries, it may consider alternatives, including revisiting the idea of a liquefaction terminal or floating LNG unit in Cyprus,” he said.
In this context, he suggested Cyprus could reconsider its plan to export gas from the Cronos and Aphrodite fields to Egypt, arguing the country may see little benefit under current arrangements.
Instead, these reserves could potentially be combined with others, such as Pegasus and Glaucus, to reassess the viability of building a gas terminal in Cyprus.
Energy transition timeline
Addressing concerns about timing amid the global energy transition, Ellinas said natural gas would remain in demand until at least 2050.
“There are still major investments worldwide in new discoveries and liquefaction plants,” he said, adding that global demand is expected to rise by 30 to 40 per cent by 2050.
At present, he noted, renewable energy sources account for only about 20 per cent of global energy supply.
Source: CNA
