By the fact that from the start of the loop until around 16:30, Sephiroth is working as a part of the building project at Barkeep's Saloon, it becomes obvious within a few loops that he's completely unaware. Working on the same section of paneling every single time, with his trusty puppet helping to hold things in place and Spencer spending a lot of the time sat nearby in case Sephiroth needs an opinion or even just someone to hold nails.

He's part of a larger team of clearly more-experienced builders but it seems he's still working very hard to restore Aqures in whichever way he can. It might not be a good idea for Lydia to disturb him while working, though.

Afterwards though, there is only one route through the City that takes him towards Jardin Verdoyant; Terra's flower shop-