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The Homer Ferrington gas drilling rig is operated by Noble Energy and drilling in an offshore block on concession from the Cypriot government in the east Mediterranean on November 21, 2011.Reuters

The debt-strapped economy of Cyprus may have found a solution to its cash-flow problems buried kilometres below the surface of the Mediterranean Sea.

The island's hopes are resting on Aphrodite, the natural gas field located almost 170 kilometres off the Cypriot coast, which could be worth upward of $45-billion (U.S.) if the resources prove extractable. Houston-based Noble Energy discovered Aphrodite in 2011, with initial estimates for its hydrocarbon-rich resource set at between five and eight trillion cubic feet of gas.

The potential for such a massive liquefied natural gas (LNG) resource, coupled with a strategic shipping location, could make Cyprus a first-rate energy exporter, especially to Europe. But with that much money at stake, countries such as Turkey and Greece are taking a closer look at their cut, creating messy maritime border disputes and questions over which countries will be involved in any coming export deals. The Turkish Cypriot government recently warned its Greek Cypriot counterpart that any exploitation of natural resources would have to be shared.

"The main challenge will be … how Turkey, Israel, the U.S.A., the EU [European Union] and Russia would like to be involved in the resources of the region. This will affect the future of this resource, even the future of these countries," says Serkan Sahin, upstream oil market analyst at Kahin Energy Consultancy in Ankara.

News of Cyprus' natural gas potential also grabbed the attention of Israel's Delek Drilling and Avner Oil & Gas Exploration – both part of the Delek Group. In June, together with Noble Energy, the companies signed a memorandum with the Cypriot government to approve construction of an LNG terminal with estimated building costs of $6-billion – a complete deal should be signed by Dec. 31. Those in the industry expect the Israeli government to get involved as well, not only to ensure its piece of the export business, but also make sure its country is promised its share of domestic supply, as the country is now heavily dependent on imported fuel.

After billions in monetary bailouts and a deepening recession, the island's battered economy could use this break and hopes to start LNG exports by 2020. But economic and bank restructuring needs to be firmly in place for Cyprus to really take advantage of its LNG payout, says Mr. Sahin.

"Exporting hydrocarbon ... will surely have a positive effect and create a really beneficial income, but as long as the structural problems [remain] unsolved," he says, "this income would not be helpful."

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