Cyprus announced on Sunday that offshore reserves in its Aphrodite gas field have been pronounced commercially exploitable, the first such development in four years of energy exploration.
US firm Noble Energy made the first find off the southeast coast in 2011 in the Aphrodite field (Block 12), which is estimated to contain around 127.4 billion cubic metres (4.54 trillion cubic feet) of gas. Israeli firms Delek and Avner have a 30 percent stake in the venture.
“Noble Energy International, Delek Drilling and Avner Oil Exploration, holders of a licence for the exploration of hydrocarbons in Block 12 of Cyprus’s Exclusive Economic Zone (EEZ), have declared commerciality of Aphrodite,” the energy ministry said in a statement.
It said the venture will now submit a development and production plan to the government covering method and timeline for extraction and sales. It is subject to cabinet approval.
The ministry hailed a “significant milestone to Cyprus’s transition from the hydrocarbons exploration phase to that of exploitation.”
“It is another important step towards the monetisation of the country’s indigenous natural gas reserves, both for domestic electricity generation… as well as exports via direct subsea pipelines to neighbouring countries.”
The announcement comes after Italian-South Korean energy consortium Eni-Kogas said in March it had failed to discover any exploitable gas reserves in deep-sea drilling off the Mediterranean island.
In January, French energy giant Total said it had failed to locate any targets to test-drill in the blocks it is licensed to exploit.
Both Kogas and Total have gone back to the drawing board with no significant move on Cyprus expected within the next two years.
Cyprus needs to find more gas reserves to make a planned onshore terminal financially viable as it seeks to become a regional energy player.
It had planned to build a liquefied natural gas plant that would allow exports by ship to Asia and Europe, but the reserves confirmed so far are insufficient to make that feasible.
Cyprus and energy-starved Egypt are looking into the possibility of transferring gas from the Aphrodite field to Egypt via an undersea pipeline. Cyprus hopes to begin exporting gas, and maybe oil, by 2022.
Cyprus’s search for energy has caused friction with Turkey, which does not recognise the island’s EEZ and wants to see the process put on hold until there is a settlement of the island’s decades-old division.
Cyprus secured €10 billion in emergency loans from the eurozone's bailout fund in April 2013 to avoid bankruptcy.
The Cypriot banking sector got into trouble mainly because it lost €4 billion, or 22% of Cypriot GDP, on the restructuring of Greek sovereign debt in 2012.
Under the bailout deal, Cyprus Popular Bank, also known as Laiki, was closed down and its guaranteed deposits of up to €100,000 transferred to the biggest bank, Bank of Cyprus.
Deposits above €100,000 in both banks, which were not guaranteed under EU law, were frozen and used to resolve Laiki's debts and recapitalise Bank of Cyprus.
The deal was heavily criticised by European Central Bank President Mario Draghi who said the Cyprus bailout was "no template" for future deals.
Calls by Cypriot leaders to revise the agreement were rejected.