Cyprus may be placing growing emphasis on political progress at the expense of commercial returns in its natural gas strategy, according to energy expert Dr Charles Ellinas, who warned on Wednesday that the government appears increasingly willing to grant concessions to multinational energy companies to keep offshore projects moving.

His comments came after ExxonMobil and QatarEnergy declared the Pegasus and Glaucus fields in Block 10 of Cyprus’ exclusive economic zone (EEZ) to be commercially marketable. While the announcement marks an important milestone in the development process, Ellinas cautioned that it should not be interpreted as a final commitment to move ahead with production.

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Marketable Does Not Mean Approved For Development

Speaking to the Cyprus News Agency, Ellinas said the companies were effectively meeting a procedural deadline after confirmatory drilling established the commercial viability of the discoveries.

“This does not mean that it will proceed with development,” he said, noting that a final investment decision is unlikely before 2029 and that exports are not expected to begin before 2033.

For Ellinas, the more important question is not whether the fields have been declared marketable, but under what commercial terms they will eventually be developed. After years of delays, he argued, the government appears increasingly focused on demonstrating progress while paying less attention to the long-term economics that will ultimately determine the value of the projects.

Concessions May Be Rising As Margins Tighten

That concern is closely linked to the economics of future gas exports, which Ellinas believes are becoming increasingly challenging. He noted that ExxonMobil has already signed memorandums of understanding with Egypt to transport Cypriot gas through Egyptian infrastructure, potentially via the Segas liquefaction terminal in Damietta or a planned new terminal in Port Said.

Even so, he questioned whether those export routes would generate sufficiently attractive returns.

“Based on the liquefied natural gas prices expected at the time ExxonMobil starts exporting, the margins are small. For it to become commercially viable, Cyprus must make concessions,”

he said.

According to Ellinas, industry developments suggest the government has already granted significant concessions, potentially leaving the state with only a modest share of future profits if LNG prices remain weak and Brent crude prices also soften.

In his view, the negotiating dynamic can easily become self-reinforcing. Once governments begin relaxing commercial terms to preserve project momentum, companies often return seeking additional concessions.

Commercial Reality Is Catching Up With Political Ambition

Ellinas believes Cyprus has now reached the point where political priorities are beginning to outweigh commercial considerations. After years of delays following the country’s offshore discoveries, securing an export route has become increasingly important. That urgency, he warned, could weaken the government’s negotiating position.

He pointed to Italian energy company Eni, which has yet to reach a final investment decision on the Kronos field in Block 6 of Cyprus’ EEZ. Although the technical studies have reportedly been completed, the continued delay suggests commercial issues remain unresolved.

“It seems that the problems are continuing, so that the company cannot announce a final investment decision,”

he said, adding that Eni may also be seeking additional concessions.

Global LNG Supply Could Push Prices Lower

The broader market outlook may make those negotiations even more difficult. Ellinas expects global LNG supply to increase by as much as 40%, a development that would likely place significant downward pressure on prices.

“With those huge quantities entering the market, it is expected that LNG prices will decrease considerably,”

he said.

That outlook, he added, is also likely to influence future discussions with Chevron, which holds rights to Block 12 alongside Israel’s NewMed Energy and BG Group, owned by Shell. Block 12 contains the Aphrodite gas field.

According to Ellinas, Chevron previously estimated that developing and exporting Aphrodite would cost around €4 billion without a floating processing platform. Cyprus later requested that such a platform be included, and the company agreed. Even so, he believes negotiations are unlikely to end there.

“I believe they will come and start asking us for more concessions,” he said. “I hope they do not, but I am worried about it.”

ExxonMobil’s Wider Position In The East Mediterranean

Ellinas also highlighted ExxonMobil’s expanding footprint in the eastern Mediterranean, noting that the company now controls a substantial strategic area through its interests in Blocks 4 and 10A. In his view, that gives the company greater flexibility when assessing future discoveries and export options.

He said drilling in the new blocks remains strategically important, even though Pegasus and Glaucus already contain sufficient gas to support exports to Egypt. If additional discoveries significantly increase available volumes, Egypt’s existing infrastructure may eventually prove insufficient, creating the need for alternative export solutions.

That flexibility benefits ExxonMobil by allowing it to keep multiple development options open while postponing major investment commitments. For Cyprus, however, Ellinas warned that continued delays combined with growing concessions could ultimately leave the country with less favourable commercial terms for some of its most valuable energy assets.