Cyprus on Thursday signed licence agreements with Italy’s ENI and South Korea’s Kogas for exploratory drilling aimed at exploiting offshore oil and gas deposits.
Commerce Minister Neoclis Sylikiotis called it a “very significant step” for the recession-hit east Mediterranean island’s future prosperity.
“Today we take another decisive step toward realizing the hope of a new path to prosperity, progress and peace in our country and the surrounding region,” he told reporters.
Last October, drilling permits subject to negotiation were approved for blocks 2, 3, 9 and 11 of Cyprus’s Exclusive Economic Zone, and in December block 10 was added to the list.
On Thursday the Italian-South Korean partnership signed a deal reportedly worth €150-million ($200-million U.S.) for permits to explore blocks 2, 3 and 9.
In December, talks with preferred bidders for block 9 – a French-Russian tie-up involving Total ENP Activities and Novatek – ceased after proving “unsatisfactory.”
France’s Total is still in the running to exploit block 11 on its own and the government has also decided to negotiate directly with it for block 10.
U.S. firm Noble Energy Inc. was the first to drill when awarded block 12, and in December, 2011, said it had discovered gas reserves of up to 8 trillion cubic feet (226.5 billion cubic metres), with an estimated value of €100-billion.
This would satisfy domestic needs for decades and could enable Cyprus to become a regional player by exporting gas to Europe.
In the long term, Cyprus estimates it can supply up to 10 per cent of the EU’s energy demand, making the bloc less dependent on Russia.
Authorities believe there could be greater riches, not only of gas but also of oil, in adjacent blocks.
It is also estimated that there could be around 60 trillion cubic feet of gas lying beneath the seabed off southern Cyprus.
Cyprus is banking on its energy bonanza to eventually rescue it from recession as it seeks a European Union bailout.
Turkey has protested strongly against Nicosia’s energy search, branding it illegal and beginning its own exploratory drilling off the breakaway north.
President Demetris Christofias has said the energy search will continue regardless, and that any finds will be used to benefit all Cypriots.
Ankara has warned that companies involved in the Cyprus process could be shut out of Turkey’s energy investment.
Cyprus has been divided since 1974, when Turkish troops invaded and occupied its northern third in response to an Athens-engineered coup in Nicosia aimed at union with Greece.