Cyprus to build gas plant with or without Israel

[April 04, 2013]  NICOSIA, Cyprus (AP) -- Cyprus' offshore natural gas deposits are enough to warrant the construction of a gas processing plant to export excess supply, regardless of whether Israel decides to be a partner in the project, the island nation's foreign minister said Wednesday.

Ioannis Kasoulides said Cyprus is continuing talks with Israel, which has also discovered its own offshore gas deposits, on ways the countries can best exploit their mineral reserves. Cyprus is particularly keen, hoping its future gas wealth will help pull it out of a crushing economic crisis that has forced it to ask for an international bailout.

One option is to pipe the gas to Cyprus, where it could be processed for export to Europe and beyond. The pipelines and processing facility, which would liquefy the gas for easier transport, are expected to be in place by 2019-20 and cost as much as 10 billion euros ($13.33 billion).

"We must show understanding that Israel is deciding about all these matters in the coming months," Kasoulides told The Associated Press in an interview. Kasoulides said it remains to be seen whether Israel wants to be part of Cyprus' energy plans, but that the construction of the plant "will take place anyhow."

Another unpredictable factor is Turkey, which doesn't recognize Cyprus as a sovereign country and strongly objects to its gas search, and which has had troubled relations with Israel.

Cyprus was split into an internationally recognized Greek Cypriot south and a breakaway Turkish Cypriot north in 1974, when Turkey invaded after a coup by supporters of union with Greece. Turkish Cypriots declared an independent state in 1983, but is only recognized by Turkey which maintains 35,000 troops there.

Israel recently apologized to Turkey for a botched raid on a Gaza-bound flotilla that killed eight Turks and a Turkish-American in 2010 and agreed to compensate the injured and the relatives of the dead. The raid had badly ruptured Turkish-Israeli relations, but Kasoulides said he doesn't see the recent attempts to patch things up as standing in the way of potential Cypriot-Israeli energy cooperation.

Israel's apology over the incident "doesn't mean Israel is obliged to follow what Turkey is dictating in this region," the Cyprus foreign minister said.

Kasoulides and Cyprus' Commerce and Energy Minister George Lakkotrypis will travel to Israel next week for energy cooperation talks. Cyprus President Nicos Anastasiades is to visit Israel later this month.

The foreign minister said the oil and gas companies that are licensed to search for mineral deposits off the island nation's southern coast will spearhead the infrastructure construction. One recently discovered field that U.S. firm Noble Energy and Israeli Partner Delek are developing is estimated to hold 5-8 trillion cubic feet (140-230 billion cubic meters) of gas.

Cyprus energy officials estimate that Cypriot waters are estimated to hold at least 60 trillion cubic feet (1.7 trillion cubic meters) of gas, enough to cover domestic needs for decades and supply Europe's growing demand for the fossil fuel.

Kasoulides challenged suggestions that Cyprus should ferry the gas to Turkey for further distribution to Europe, saying that such an option may be too limiting and that liquefied natural gas "can sell east and west, north and south."

Kasoulides insisted that it is Cyprus' sovereign right to exploit its own mineral deposits, despite fierce opposition from Turkey, which says the rights of Turkish Cypriot are being ignored, has claimed some of Cyprus' offshore blocks as its own and has warned that it would react strongly to further gas exploration by Cyprus.

The potential gas revenue belongs to all citizens of Cyprus, but will be shared with the north after a reunification agreement is reached, Kasoulides said.

"You cannot imagine taking money and giving (it) to a self-proclaimed, non-recognized entity with the island," he said. "How come? Are we going to give them a reward also? (The gas) belongs to both communities, but it belongs to both communities constituting ... a united Cyprus."

However, Kasoulides added that some of the future gas revenue may be used to fund scholarships and research grants that would be available to both communities even before a peace deal is hammered out.

[Associated Press; By MENELAOS HADJICOSTIS]

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