Egypt and the US oil major Chevron, operator of Cyprus's Aphrodite gas field, initialled an agreement on Tuesday setting out financial and commercial terms for the planned link between the gas field and Egyptian gas infrastructure, the Egyptian Petroleum Ministry said in a statement.
The agreement is a further step towards developing Aphrodite, which is in front-end engineering and design work ahead of a potential final investment decision, a Chevron spokesperson said.
Egypt's petroleum ministry said the planned link would allow Aphrodite gas to be shipped to Egypt for domestic use or processing and liquefaction for export, depending on market demand and project economics.
The agreement follows a 15-year binding term sheet signed in April between Aphrodite's partners and Egyptian Natural Gas Holding Company for the sale of all gas recoverable from the reservoir.
Egypt and Cyprus signed a framework agreement for gas cooperation in March, paving the way for Cypriot gas to be transported to Egypt, which has liquefied natural gas export facilities and is seeking to reinforce its role as a regional energy hub.
Chevron is the operator of Aphrodite with a 35 per cent stake, along with Shell, which holds 35 per cent, and Israel's NewMed Energy, with 30 per cent.
Shell agreed in July to sell its Cyprus unit, including its Aphrodite stake, to Hungary's MOL subject to approvals and other closing conditions.
Cyprus Energy Minister Michael Damianos said linking Cypriot gas resources to Egyptian infrastructure would provide a practical model for regional energy integration.
Damianos said Cyprus's Cronos field was expected to use facilities associated with Egypt's Zohr field and the Damietta liquefied natural gas plant for export to Europe, while Aphrodite gas was expected to be sent to Egypt to help meet domestic demand.
(Reporting by Shadia Nasralla and Mohamed Ezz; Editing by Andrea Ricci)
