Cyprus energy developments and investment opportunities
Cyprus is becoming a key energy player in the eastern Mediterranean sea region following the recent offshore discovery of natural gas resources. As a member of the EU, with an open market economy and established international shipping and tourism industries, investment opportunities in the country are worth considering.
In recent years, substantial natural gas resources have been discovered offshore in the Levant Basin, along with possible recoverable oil reserves, offering Cyprus significant opportunities to develop its energy sector.
Since the discovery of the Aphrodite field by a US oil company in 2011, the country has gone through two bidding rounds for ‘blocks,’ giving companies exclusive exploration rights in Cyprus’ Exclusive Economic Zone (EEZ). Energy companies from the US, UK, Israel, France, Italy and South Korea now hold a large percentage of these blocks and the Government has now announced the launch of a third bidding round.
A key focus for exploiting Cyprus’ natural gas reserves is the construction of a Liquefied Natural Gas (LNG) storage facility. A storage facility is planned at the site of the LNG terminal in Vasilikos in Cyprus for the storage of gas from the Levant Basin of Israel in liquefied form. This location could make it a potential source of gas to Egypt.
The country is also considering its options for constructing a pipeline to transport natural gas to either Egypt or Europe. One proposal is for the transportation of natural gas between Egypt and Cyprus through a direct pipeline, while another is an East Med pipeline that would transport gas from offshore Cyprus to mainland Greece and the rest of the EU.
Construction of the VTTV oil storage terminal was completed in November 2014 costing approximately EUR300m and with a storage capacity of 28 tanks of gasoline, diesel, jet fuel and gasoil. A second phase is now under development to increase the storage capacity by a further 13 tanks with an additional investment of EUR105m. Cyprus has the potential to become a regional fuel hub thanks to its strategic location, connecting Europe and the Black Sea with markets in the Middle East and Asia. The widening and deepening of the Suez Canal could also significantly increase traffic in the region and bring more opportunities to Cyprus, which is likely to entice more oil product transhipment opportunities to its shores.
Why invest in Cyprus?
These developments present a number of potential opportunities to invest in Cyprus, including taking advantage of the unallocated exploration blocks. There may also be opportunities resulting from the storage terminals, and the fact that Cyprus is at the crossroads of major international energy routes. Additionally, the country’s status as a shipping maritime centre as well as its attractive tax system and strategic location, make it a worthwhile consideration.
For more information, contact:
Nexia Poyiadjis, Cyprus
T: +357 22 456111