Cyprus sees offshore gas as 'catalyst for reunification'
Recently discovered natural gas reserves in Cyprus’ offshore economic zone could become an incentive for unblocking the island’s stalled reunification talks, a government minister said today (6 July).
Neoklis Sylikiotis, the minister of Commerce, Industry and Tourism, said he would expect that the commercial development of offshore gas resources should act as “a catalyst for reunification”.
Sylikiotis, who spoke during activities marking the start of the Cyprus EU presidency, said one of the presidency’s main priorities would be the security of energy supplies. In this context, he mentioned a planned meeting in Cyprus on 9 November of EU energy ministers with their colleagues from the Mediterranean countries.
Asked if the discovered gas reserves would help Cyprus repay its dues for the bailout it is seeking from the EU and Russia to prop up its ailing banking sector, Sylikiotis stressed the European dimension of the potential energy bonanza for his country.
The discovery in the last decade of important gas fields in the eastern Mediterranean offers the possibility to secure a new source of energy for the European Union, the minister told Brussels-based correspondents visiting the island.
“Our ambition is that Cyprus would become a regional energy hub and through Cyprus there will be a new energy corridor to strengthen the energy security of Europe,” Sylikiotis said, speaking through an interpreter.
The first exploratory well has been completed by US-based Noble Energy and reserves of 198 billion cubic meters (bcm) have been located in a gas field know as Block 12, he said. By contrast, Britain’s proven reserves are 256 bcm.
Sylikiotis expects gas supplies for domestic consumption to start flowing in 2017 to cut reliance on imported fuels and exports to being in 2019. The minister said the process have begun for selecting a construction company to build an LNG terminal at a cost of €8 billion to € 10 billion.
‘Great investor interest’
The minister said there was “great interest” for international investors and that he had already been approached by investors willing to be part of the hydrocarbon projects, as well as companies interested in investing in the LNG terminal. The gas from Block 12 will be transported to Cyprus via an offshore pipeline, and Nicosia is already in discussions with Noble Energy for this project, he said.
Cyprus is exploring with the EU possible support for pipelines to bring gas from third countries such as Israel via Cyprus.
Asked by EurActiv if the income sharing wouldn’t become a problem, as Turkey sees the development of the Cyprus gas resources as a casus belli, Sylikiotis said:
“With regard to revenues from energy resources, we are already starting to create a national hydrocarbon’s fund, according to models that have been implemented internationally. The revenues for national gas will not be used only to fill in the deficits of the national budget, but a large part will be managed by the following generations,” he said.
“We also think that the discovery of these very important energy fields should function as a catalyst for the solution of the Cyprus problem and the reunification of our country. So in the future all the residents, both Greek Cypriots and Turkish Cypriots of Cyprus, would benefit from this. Of course the requirement id to have more political will from the other side and particularly from Turkey, so that the talks can go ahead,” Sylikiotis said.
On Thursday, Cypriot President Demetris Christofias presented a somewhat different perspective. He said that revenue sharing from the newly discovered resources would only be possible under the conditions of a reunification agreement
“Regarding the revenue from the exploitation of the hydrocarbons, of course, for something like that to take place, we have to reunify the country, the federal system must operate, and then of course, the sharing would take place, through the central budget toward the two constituent states, the two regions,” Christofias said.
He added that Turkey had nothing to lose from such a development and that he hoped that it would “show understanding and stop behaving like a colonial power in the beginning of the 21st century.”
Cyprus has been divided since 1974 despite repeated efforts under the auspices of the UN to bring the leaders of the Greek and Turkish Cypriot communities to the negotiating table.
Hopes for reunification were raised in 2002 when then-UN Secretary-General Kofi Annan suggested a two-part federation with a rotating presidency.
In an April 2004 referendum, the Greek Cypriots rejected - and the Turkish Cypriots approved - a UN-sponsored unity plan. The plan's failure disappointed EU officials, who had agreed to allow Cyprus to join the EU that year partly in the hope that doing so would encourage a solution. In May 2004, the Greek Cypriot-controlled Republic of Cyprus became a full member of the EU.
At their December 2004 summit, EU leaders agreed to open accession talks with Turkey on 3 October 2005. One of the conditions specified was for Ankara to extend a 1963 association agreement with the EU's predecessor, the European Economic Community, to the Union's 10 new member states. This group included the Greek Cypriot state, which is not recognised by Turkey.
In July 2005, Turkey signed a protocol extending its customs union to the EU-10 states, but at the same time Ankara issued a declaration saying that its signature did not mean it had recognised the Republic of Cyprus. Turkey also refused to open its ports and airports to Cyprus, as it claims the EU has fallen short of having direct trade with the unrecognised northern part of the island.
- 1 July - 31 Dec. 2012: Cyprus EU presidency of the Council of the European Union