NICOSIA: Cyprus said Thursday it has signed a deal with French energy giant Total to explore the feasibility of a liquefied natural gas plant on the island to exploit offshore reserves.
A memorandum of understanding was signed between Cyprus and Total E&P to advance a proposed LNG plant at Vassiliko near the island's second city Limassol.
"This follows the award in February to Total of Exploration and Production Sharing Contracts for Blocks 10 and 11 of the Exclusive Economic Zone (EEZ) of the Republic," said a joint Total and Cyprus government statement.
"The MoU records the support of Total for the monetisation of potential natural gas reserves in Blocks 10 and 11 of Cyprus's EEZ through a variety of options giving priority to liquefaction and LNG export to European and Asian markets," it added.
Cyprus said the two parties would cooperate on the feasibility of the proposed plant "with due consideration to Total's views on the structuring and development of the LNG project".
In June, Cyprus signed a similar agreement with a partnership comprising US-based Noble Energy International and Israeli companies Delek Drilling and Avner Oil Exploration.
At that signing, Cyprus Energy and Commerce Minister George Lakkotrypis said the proposed LNG plant constitutes "the fundamental and necessary infrastructure that will allow the export of Cypriot natural gas to European and global markets".
If built, the LNG plant would be the biggest infrastructure project in the island's history.
But its multi-billion dollar (euro) cost has raised question marks about whether the exploitable reserves are sufficient to warrant the necessary investment.
In October, it was announced that gas reserves off Cyprus are nearly a third less than initially estimated but remain "substantial".
The almost bankrupt Mediterranean island is hoping its untapped offshore energy resources can pull it back from the financial brink after a banking meltdown earlier this year that prompted an EU-IMF bailout.
It hopes to commercially export its gas, and maybe oil, riches by 2020.
The eastern Mediterranean has been a hive of exploratory activity, with the Cypriot government granting exploration permits to international prospectors after Israel discovered massive offshore gas deposits in 2010.
Israel is seeking to export around 40 percent from its own gas fields and Cyprus is hoping to act as the conduit to the European market.
Noble Energy made the first find off Cyprus's southeast coast in 2011 near the Israeli maritime boundary.
In a test well named Aphrodite-1 after the island's mythical goddess of love. (AFP)
