The final investment decision to develop the Kronos natural gas field in Block 6 of Cyprus’ exclusive economic zone could support future gas exports and the commercial development of additional discoveries, according to energy expert Charles Ellinas.
Kronos Moves Into Development
Ellinas said the decision by the Eni and TotalEnergies consortium marks an important milestone after years of delays. “This is certainly a historic development because, after 15 years, we are finally moving towards the process of exporting natural gas,” he said. Annual production from the Kronos field is expected to reach around five billion cubic metres, with about four billion cubic metres destined mainly for European markets. Even so, Ellinas said Cyprus’ exports would represent only a small share of Europe’s annual gas imports.
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Egypt Expected To Remain The Regional Hub
Ellinas said the project is unlikely to make Cyprus a regional gas hub, arguing that Egypt will continue to hold that position. He noted that both Cypriot and Israeli gas is transported to Egypt, with Israel expected to export around 20 billion cubic metres annually, roughly four to five times the volume expected from Cyprus.
Cyprus’ Financial Return May Be Limited
Ellinas said Cyprus could receive limited financial benefits from the project because of concessions agreed during negotiations. According to his estimates, the country’s overall benefit may not exceed 0.5% of GDP once production peaks in four to five years, while most revenues during the first three years will be used to recover the companies’ investment costs. “Unfortunately, Cyprus’ revenues from this project will be very low because, for it to proceed, Cyprus made significant financial concessions and accepted additional risks,” he said.
Zeus And Kalypso Could Follow
Ellinas said the development of Kronos could improve the commercial prospects of the Zeus and Kalypso discoveries. He argued that the government should seek to reserve Kalypso for Cyprus’ domestic gas needs, particularly as delays and rising costs at the Vasiliko import terminal make local production a more practical option. “If we want cheap natural gas, we need to bring in our own,” he said, adding that Kalypso could supply the domestic market after 2030.
Electricity Prices Unlikely To Ease Soon
Ellinas said electricity prices are unlikely to fall in the near term despite investment in renewable energy and storage. While storage can reduce wasted energy, he argued it will not lower prices unless electricity market rules are reformed so that the benefits of renewable generation are shared more broadly. “The law needs to change so that the benefits of renewable energy are shared more fairly,” he said.
Grid Upgrades Still Years Away
Ellinas said the planned electricity interconnection with Greece and Israel is unlikely to become operational before 2031. As a result, he believes meaningful reductions in electricity prices are unlikely before the end of the decade, with Cyprus needing to focus instead on upgrading its electricity grid, improving market operations and strengthening the resilience of its power system.
