Cyprus will develop offshore gas irrespective of reunification

Offshore oil rig, Cyprus. [Flyover Media/YouTube]

Cyprus will continue its project of developing offshore gas, keeping this dossier “completely separate” from the negotiations for the reunification of the island, the Cypriot Minister of Energy, Yorgos Lakkotrypis, said today (26 May).

Speaking to a small group of Brussels journalist, Lakkotrypis, whose ministerial portfolio also includes commerce, industry and tourism, discussed the third licencing round for the exploration of offshore gas, which was launched on 24 March.

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In the Cyprus EEZ, there is already a significant discovery, the “Aphrodite” field, in block 12 (see map). But the discovery of “Zohr” in Egypt’s EEZ, at only 6 kilometres from the Cyprus EEZ, is said to be a game changer. Zohr has proven the existence of a geological model which seems to be very promising, also in terms of possible oil finds, the minister explained.

As such, Cyprus announced on 24 March the start of the third round for awarding hydrocarbon exploration licences for blocks 6, 8 and 10 of the island’s EEZ. There will also be another bidding round for block 12 where Aphrodite is situated, because the 7-year contract for exploration has expired. According to the contract, the company who holds the contract retains Aphrodite to exploit it, profit-sharing with the Cypriot state remaining confidential.

Lakkotrypis said that discussions were ongoing on the options to deliver gas from Aphrodite, the most likely one being via a pipeline to Egypt. Cairo has huge needs for natural gas, and in addition, the gas could be liquefied there and sent to Europe. Other options, such as developing an LNG terminal in Cyprus, are not seen as viable, the minister explained.

The Cypriot minister said that in 2014-2015, there had been a lot of threats from Turkey. In the case of block N. 9, Ankara had even sent a naval vessel to intimidate explorers.

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“I would like to say the Eastern Mediterranean resembles the North Sea. It doesn’t. It is not an easy region, for anyone,” Lakkotrypis said. But he added that irrespective of the problems, his country was signing agreements with multinational commercial companies, was honouring its agreements, and was progressing in developing the resource.

“You are aware that there are discussions to solve the Cyprus problem. They have been going on for a year, a year and a half. We all hope they are going to be a just, fair and sustainable settlement for the Cyprus problem. Having said that, however, we are keeping the two, what we are doing with oil and gas, and the discussions to solve the Cyprus problem, completely separate,” he said.

Lakkotrypis said a pipeline to bring the offshore gas to Turkey “is not an option” as long as the Cyprus problem is not settled.

“Today Cyprus cannot even only sell [to Turkey] olive oil, because Turkey doesn’t apply the Ankara protoco,” he said.

Although it is an EU candidate country, Turkey does not recognise the Republic of Cyprus and calls the country “Greek Cyprus.” When EU leaders decided in 2004 to open accession negotiations with Turkey, 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 newest member states. This group includes the Republic of Cyprus, which is not recognised by Turkey.

In July 2005, Turkey signed the so-called Ankara protocol, extending its customs union to the newest states. But at the same time, it 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 a commitment to trade directly with the unrecognised northern part of the island.

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