Energy

Cyprus’s energy sector is blooming and the country is committed to ensuring the security of its energy supply, protecting the environment, creating healthy competition in the energy sector and encouraging the development of renewable energy technologies and production.

Renewable Energy

Cyprus has a wide range of renewable energy sources and technologies such as solar energy, photovoltaic grid and stand – alone systems, wind energy, wind turbines for water pumping as well as for generating electricity, biomass and small hydro.

Due to the long hours of sunlight that the country enjoys, Cyprus is one of top ranking countries in solar energy use for water heating in households, and has achieved significant progress in the production of energy from Renewable Energy Sources (RES). The most important projects relating to power generation from RES concern wind parks and photovoltaic parks.

The energy policy of Cyprus is harmonized with that of the European Union. The main aspects of the energy policy, as stated by the Ministry of Energy, Commerce, Industry and Tourism, include:

  • The liberalisation of the electricity and oil markets;
  • The establishment and operation of a strategic oil stock terminal;
  • The implementation of development programmes relating to the use of energy conservation, technologies, the utilization of ingenious RES and the protection of the environment from industrial pollution;
  • The RES target is to supply at least 13% of the country’s energy by 2020;
  • The promotion of oil products and other sources of environmentally-friendly energy, such as natural gas.

Oil & Gas Sector

Cyprus, a full EU member since 2004, is located at the Eastern Mediterranean and stands at the crossroads of big international energy routes. Assessments by US Geological Surveys put the level of undiscovered oil and gas resources in the Eastern Mediterranean to significant amounts of natural oil in gas that lie in the island’s Exclusive Economic Zone (EEZ). Cyprus may have up to 40 trillion cubic feet (tcf) of natural gas reserves in some of its blocks within its EEZ, and could start exporting 2.0 tcf of LNG a year by 2020. The attraction of energy companies is estimated to result in the increase of financial investments in the island. These financial investments will require infrastructure, maintenance, support services, financing and banking, and such demands will result in job creation and eventually in the stabilization of the economic environment of the Republic of Cyprus.

Thirteen offshore exploration blocks have been defined to date in the Republic of Cyprus Exclusive Economic Zone. In 2008 Cyprus signed its first hydrocarbon exploration contract with US Noble Energy for offshore block 12. Exploratory drilling conducted by Noble in late 2011 revealed a natural gas reservoir with an estimated gross mean of 7 trillion cubic feet, which is close to a major gas discovery by neighbouring Israel. In February 2013 French energy giant Total was granted hydrocarbon exploration licenses in Cyprus’ EEZ to search for oil and gas in offshore blocks 10 and 11.

In October 2012 the government announced its decision to launch negotiations to award licenses for blocks 2 and 3 with the consortia ENI-KOGAS (Italy and South Korea).

Also, in 2016 The Council of Ministers in Cyprus approved a proposal for the participation of the British Gas Group in Block 12 of the Cyprus’ Exclusive Economic Zone (EEZ) for the exploration of hydrocarbons. Under the terms of the proposal Noble will continue to be the main operator in the block with a share of 35% while BG will also hold a 35% share and Israeli group Delek a 30% share. (read more)

Cyprus’ third offshore licensing round in July 2016 attracted six bids from the existing companies in Cyprus as well as new entrants including ExxonMobil, Qatar Petroleum and Statoil. (read more)

The building of liquefied natural gas (LNG) terminal is the best option for Cyprus to export its hydrocarbons. The pipeline to Turkey, despite the fact that it could be most cost-effective solution, is not attractive due to political implications. Obviously, a pipeline transferring natural gas from Cyprus to Greece is commercially not viable, as the cost of constructing such a pipeline is prohibitive. The LNG terminal is expected to be ready by 2019. The plan envisages the construction of three LNG trains (liquefaction and purification facilities), making the terminal one of the largest in the world. (read more)

Furthermore, a Memorandum of Understanding was signed between Egypt and Cyprus to transport natural gas via a direct subsea pipeline from the Exclusive Economic Zone of the Republic of Cyprus to a landing point in the Exclusive Economic Zone or onshore the Arab Republic of Egypt either for domestic consumption or re-export. An Agreement was also signed in August 2016 between the two countries which sets out the legal framework allowing companies to commence discussions on the transport of natural gas from Cyprus to Egypt via a sub-sea pipeline. (read more)

Presently, exploration licenses have been granted for 6 offshore blocks within Cyprus’ EEZ to 3 internationally renowned oil & gas companies and their partners. The Government of Cyprus is continuing its negotiations concerning the infrastructure requirements necessary for bringing the natural gas onshore for local consumption, as well as liquefaction for export into Europe and other markets.

It is expected that in the near future, with the natural gas being converted into energy, Cyprus will become an energy hub.