Egypt to buy all gas from Cyprus’ Aphrodite field under new pipeline agreements

Egypt is set to purchase the entirety of the natural gas produced from Cyprus’s 3.7 tcf Aphrodite field, according to a disclosure (pdf). The agreement was finalized after the Egyptian Natural Gas Holding Company (Egas) inked a term sheet with field partners NewMed Energy, Chevron, and Shell, alongside a host government agreement to build a USD 2 bn pipeline connecting the field to Egypt’s coast.

Why it matters: The agreement secures some 100 bcm of Cypriot gas over time with hopes of re-exporting to Europe, feeding Egypt’s liquefaction infrastructure and reinforcing its position as the East Med’s premier processing hub. The massive supply will feed our LNG export facilities at Idku and Damietta while also providing fuel for domestic consumption amid an ongoing energy crisis — helping reduce our large LNG import bill and reduce reliance on pipeline gas from Israel.

The details: The subsea transmission system will be constructed and operated by Aphrodite Midstream, a new special purpose company jointly owned by the Aphrodite partners and an Egyptian government-appointed entity. Under the 15-year contract — which includes a five-year extension option — the gas price will be linked to Brent crude, complete with a floor and a ceiling price. Gas will land at Port Said via pipeline, receiving up to 700 mmcf/d for six years before shifting to flexible volumes.

ICYMI- Cyprus agreed in February to foot the entire USD 2 bn bill for the pipeline, dropping its push for cost-sharing in exchange for utilizing Egyptian liquefaction infrastructure. Last year, the government reached an agreement with Italy’s Eni to connect Cyprus’s offshore Cronos gas field to Zohr infrastructure for liquefaction and re-export starting 2027.

What’s next: The parties have 12 months to sign final agreements, while the Egyptian parliament has six months to approve the fiscal framework. A final investment decision must be adopted within 12 months of the final contracts being signed, with pipeline construction expected to begin in 2027, while gas from Aphrodite will start heading our way by 2030.