Oil and gas exploration in Cyprus is in its infancy. However the announcement of the finding has created a heated international focus around Cyprus. At the same time there are substantial levels of activity in exploration as well as planning and negotiating for new licenses for future exploration.
The discovery of natural gas in the southern part of the Exclusive Economic Zone of Cyprus has the potential to contribute billions to the country’s economy. According to the Ministry of Energy, Commerce and Industry of the Republic of Cyprus the value of gas in the first of the 12 marine plots estimated between USD 80 -100 billion. The benefits to the economy and its residents will be extremely important – such as reducing the power supply costs and the cost energy per unit of GDP and indirectly as the construction of gas liquefaction plants, warehouses and ports, resulting in increased foreign investment in the country and the development of the labor market. Also, the positive effect on the country’s GDP will be important when you consider that GDP now stands at USD 24 billion and the deposit has value 4-5 times greater.
In addition to the stream of revenues from the future export of the island’s gas reserves, the emergence of this new industry and the possible direct foreign investment in significant infrastructure projects such as a liquefaction plant and the pipeline facilities will create the need for a great number of other support services. All these to boost the construction industry and property market as well as having a favorable indirect effect on many other sectors of the economy such as financial and professional services. Furthermore, it will improve the over-reliance of the economy on financial services and tourism. There are proven successful models for managing the economic aspects of gas reserves, such as the Scandinavian model, and the hope is that Cyprus will secure the advice of independent and trustworthy professional advisors to guide the setting up and running of such a model.
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