(Commonwealth_Europe) Cyprus has recently emerged as a highly attractive destination for energy investment. Energy Minister George Papanastasiou, emphasizing the country’s strategic location during his speech at the Capital Link Cyprus Business Forum in New York, highlighted Cyprus’ position as a gateway, nestled between Africa and the Middle East, and as a member of the European Union. This geographical advantage, coupled with Cyprus’ evolving energy landscape, presents it as an ideal entry point for international energy investments.
The minister also drew attention to the recent upgrades in Cyprus’ credit ratings by international agencies, calling these a significant sign of credibility and trust. These upgrades, he noted, are crucial for Cyprus’ standing on the global stage, enhancing its ability to attract foreign investments. According to Papanastasiou, when a country receives such positive ratings, potential investors and international stakeholders can no longer overlook it.
In addition to positioning Cyprus as a favorable investment hub, the minister discussed the ongoing efforts by his ministry to address energy costs, aiming to alleviate pressure on consumers. Cyprus is actively working on strategies to provide practical solutions for its citizens, ensuring affordable energy access while harnessing the potential of its natural resources. Among these resources is the considerable natural gas reserve located beneath the seabed off Cyprus’ coast. However, Papanastasiou noted that the primary challenge is the lack of necessary infrastructure to extract and liquefy the natural gas. This infrastructure gap has hindered the development of these promising reserves, preventing the country from fully capitalizing on its energy potential.
In a more specific context, the minister highlighted the recent agreements signed between Cyprus and Egypt, which are crucial steps towards unlocking the energy wealth of Cyprus’ exclusive economic zone (EEZ). One such agreement relates to the ‘Aphrodite’ gas deposit located in Block 12 of Cyprus’ EEZ, while another involves a host government agreement between Cyprus, Egypt, and the consortium of French multinational company Total and Italian energy giant Eni. This agreement focuses on Block 6 of Cyprus’ EEZ and the gas fields known as Kronos, Zeus, and Kalypso, located beneath Egypt’s seabed. The deal establishes Egypt as the “host government” for these fields, meaning that the gas extracted will be sent to Egypt’s Segas liquefied natural gas (LNG) terminal in the port city of Damietta for processing and liquefaction.
Eni, which operates the nearby Zohr gas field in Egypt, will play a pivotal role in transporting the Cypriot natural gas to Damietta, utilizing its existing infrastructure to facilitate this process. The closeness of the Kronos reservoir and Block 6 to the Zohr field allows for an easy connection between the two projects, making the gas extraction and liquefaction process more efficient. This collaboration between Cyprus and Egypt is a significant step toward realizing the full potential of Cyprus’ offshore gas reserves, though much still depends on the development of the necessary infrastructure.
Papanastasiou also discussed another important project, the Great Sea Interconnector, which aims to link the electricity grids of Greece, Cyprus, and Israel. The project has garnered substantial interest from international investors, with countries such as the United Arab Emirates and France showing strong investment potential. However, the project has faced significant challenges, particularly with regard to its financing and the geopolitical risks associated with the region. One such challenge occurred recently when Greece’s independent transmission system operator, Admie, temporarily suspended payments to the French company Nexans, responsible for manufacturing and installing the submarine cables that are essential for the project. This suspension came in response to disruptions caused by Turkish warships, which reportedly interfered with seabed surveys related to the interconnector. As a result, Admie halted the next installment of €70 million, although it had already disbursed €200 million to Nexans for work completed up until that point.
Despite these setbacks, the Great Sea Interconnector remains a key project for Cyprus, as it holds the potential to significantly enhance the island’s energy security and integration with neighboring countries. Papanastasiou acknowledged the risks involved in such an ambitious project, noting the technical, fiscal, and geopolitical factors that must be carefully considered. Although it has created uncertainty regarding the project’s future timeline, Papanastasiou saw the decision to pause payments as a necessary step to mitigate these risks.
In addition to the technical challenges, the Cyprus government is still weighing its participation in the project’s holding company. Admie, which holds 51% of the project, has requested that Cyprus contribute €100 million to secure its stake, but the government has yet to make a decision. A cost-benefit analysis was completed in July, but it was not until two months later that Cyprus authorities received the financing plan for the project. This delay has raised concerns about meeting project deadlines, especially with the European Commission’s financial backing, including €100 million through the EU’s Recovery and Resilience Facility.
Greek officials have taken note of these delays. Greek Energy Minister Theodoros Skylakakis has expressed frustration over the lack of timely decisions from Cyprus, warning that failure to move forward with the project could result in missed deadlines and jeopardize the financial support offered by the European Union. The Great Sea Interconnector is a critical element of the EU’s energy strategy, and its completion is considered vital for enhancing regional energy cooperation and reducing dependency on external energy sources.
Cyprus’ energy sector is undergoing significant transformation, driven by both natural resource exploration and infrastructure projects that promise to reshape the island’s energy landscape. While the challenges are substantial, the potential rewards are equally significant, and the island is positioning itself as a major player in the Eastern Mediterranean’s energy future. The coming years will likely reveal whether Cyprus can successfully navigate these challenges and fully unlock its energy potential.
