The approval of the development and production plan for the Kronos field in Block 6 of Cyprus’ EEZ has created a positive climate around Cyprus gas exports to Egypt, but energy expert Charalambos Ellinas says serious questions remain over the real economic benefit for the Republic.
Concerns over Cyprus’ financial gain
Speaking on SIGMA’s Mesimeri kai Kati, Ellinas said he views the agreement as more political than techno-economic, expressing doubts over whether the project will prove substantially profitable for Cyprus.
“Cyprus has accepted significant risks for the project to move forward,” he said, adding that profitability could be “negligible”.
Companies set to recover costs
Ellinas explained that the companies involved have a strong incentive to proceed with Kronos, as the project would use existing infrastructure linked to Egypt’s Zohr field and the Damietta LNG terminal.
He said both Zohr and Damietta are currently operating below capacity, causing losses compared with the companies’ original investments.
Through Kronos, he added, companies would receive payments for using these facilities, allowing them to recover part of their lost costs.
“Even if the project does not generate profit, the companies come out ahead because they recover lost expenses,” Ellinas said. “But Cyprus depends on the project’s profit. Its share comes from net profit, which may be negligible.”
Political factor behind the project
Ellinas also linked the promotion of the agreement to political considerations, saying the prospect of Cyprus gas production is being presented as a positive development publicly.
He noted that several years will pass before it becomes clear whether the project is truly profitable, making the issue easier to manage politically in the present.
Uncertainty over recoverable reserves
Referring to the field’s technical data, Ellinas said Kronos lies in carbonate rocks similar to Zohr. He recalled that Zohr was initially estimated at around 30 trillion cubic feet of gas, before real quantities were later revised significantly downward.
For Kronos, he said current estimates point to around 3 trillion cubic feet, but recoverable quantities may be much lower, possibly between 1.5 and 2 trillion cubic feet.
LNG supply could pressure prices
Ellinas also pointed to international LNG market developments, estimating that global supply will rise significantly after 2028.
He said major LNG projects, especially in the United States, are already under way or awaiting approval, with companies accelerating investments due to geopolitical developments and market demand.
According to Ellinas, this increase in LNG supply is expected to pressure gas prices in the coming years, potentially pushing them below $8 per thousand cubic feet and affecting the project’s profitability.
What could change the picture
Despite his reservations, Ellinas said the project could still prove profitable for Cyprus if recoverable quantities are higher than current estimates and international prices are stronger during production.
However, he stressed that planning should be based on current data rather than optimistic market forecasts.
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