CYPRUS’S
HUGE UNTAPPED GAS RESERVES WILL BENEFIT THE EUROPEAN UNION
Geopolitical Analysis and Monitoring
wrote January 2013:
COULD IT BE THAT THE TROIKA (IMF, ECB AND WORLD BANK) IN REALITY
FOCUSES ON TAKING CONTROL OF CYPRUS’S PROCLAIMED HYDROCARBON FINDINGS?
DE FACTO LOSS OF SOVEREIGNTY: CYPRUS MAKES BIG CONCESSIONS FOR
BAILOUT
Read the entire article at:
Nicosia: EUROPE should not worry
about bailing out crisis-hit CYPRUS because the island’s huge untapped gas
reserves will benefit the EUROPEAN UNION by making it less dependent on RUSSIAN
energy, analysts say.
Despite struggling under a GREEK-exposed
debt mountain, the east Mediterranean island sits on potentially huge energy
wealth in excess of 600 billion EUR, a Royal Bank of Scotland report said.
CYPRUS hydrocarbons company chief
Charles Ellinas says the island will be exporting to EUROPE by 2019 with a view
to meeting 10 percent of the bloc’s energy needs.
“This is not totally hypothetical. EUROPE
has a huge dependence on RUSSIA and CYPRUS can help reduce that,” he told AFP.
“If you look beyond the next couple
of years the future looks rosy. After 2020 we will start to pay off our debt
and eventually create a surplus.”
RBS said that despite now facing
potential bankruptcy, CYPRUS’S future energy riches will be a boom.
“CYPRUS will become geopolitically
important for gas pipeline routes, and EUROPE should benefit from greater
energy security away from RUSSIA,” the RBS report said, also sounding a cautionary
note.
“These monies however are not
readily available; the commodity spoils of EUROPE’S new lucky country are a
medium- to long-term story.”
If further exploratory drillings
match the success of the first findings, these could top 2,950 percent of GDP.
“The long-term potential of CYPRUS
is very good but in the short term it has to make adjustments through the
austerity measures as part of any loan deal. Gas reserves are there but need
time to be exploited,” RBS analyst Michael Michaelides said.
Offshore exploration by
Houston-based Noble Energy in Block 12 of CYPRUS’S Exclusive Economic Zone
indicates a gross natural gas reserve of up to 254.9 billion cubic metres (9
trillion cubic feet).
Noble expects to commercially
extract and transfer the gas onshore by late 2018 and begin exporting to EUROPE
the following year.
ITALIAN giant ENI, FRANCE’S Total
and SOUTH KOREA’S Kogas are all negotiating for permits in other offshore
blocks.
Analyst Fiona Mullen estimates that
the current finds alone could mean gas revenues of at least one billion euros
annually.
“So the revenue will be very
significant when it comes. But I think we won’t see any significant revenue for
15 years,” she said.
Mullen said that is why it is
important for international lenders to give CYPRUS a lengthy loan repayment
period rather than the four years envisaged.
“CYPRUS will need to find more gas
before it can find finance for an LNG plant, which puts back the financing a
few more years. Then it could take 10 years to build the plant, so it could be
15 years before the plant is built and the money flows.”
Nicosia is looking to borrow some
€17.5 billion — almost 100 per cent of its annual GDP.
The finance ministry concedes that
without a quick bailout agreement, the EUROZONE country faces “bankruptcy”.
EUROZONE finance ministers are due
to discuss CYPRUS’ aid request, but a final decision is not expected then.
Finance Minister Vassos Shiarly said
Nicosia had “satisfied all the demands” of international lenders, with the
figure for bank recapitalisation the only missing piece.
Shiarly said the EUROZONE ministers’
meeting would not have a final figure for the amount needed by the banks,
expected to be up to 10 billion euros but with the government hoping to lower
it.
“Probably the magic number won’t be
known in the next couple of days,” Shiarly told state radio, adding that
another eurogroup meeting on bank recapitalisation was “unavoidable”.
This would mean an eventual
agreement would be signed by a new government following a presidential election
on February 17.
Nicosia applied for financial aid in
June after its two largest banks, severely rocked by losses connected with the GREEK
debt crisis, sought state support.
CYPRUS has already pushed through
tough austerity measures to meet demands for more than one billion euros in cuts
and savings.
One should not forget however that RUSSIA
will also have a say in the matter for it “bailed out” CYPRUS in recent past by
providing a large loan. Historically CYPRUS and RUSSIA always had close ties, politically
as well as religiously (Christian Orthodox) and last CYPRUS is a financial safe
- haven for RUSSIA’S oligarchy, something they will not give up easily.
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