Cyprus’s path to becoming an energy hub

The American and Qatari energy giants ExxonMobil and Qatar Energy have launched a new drilling operation off the coast of Cyprus, aiming to tap into the island's potentially vast natural gas reserves. 

This move, announced on Friday by Cypriot officials, aligns with the country's ambition to establish itself as a major energy player in the Eastern Mediterranean.

Cyprus, which has a designated Exclusive Economic Zone (EEZ) divided into 13 blocks, holds significant potential for gas exploration and production. President Nikos Christodoulides confirmed via X (formerly Twitter) that ExxonMobil and Qatar Energy had initiated an evaluation drilling operation in Block 5 of the EEZ.

“Cyprus continues its exploration activities with the goal of becoming a reliable source of natural gas for the European Union,” President Christodoulides stated. This comes as the EU seeks alternative natural gas sources following Russia’s invasion of Ukraine nearly three years ago.

The Cypriot Ministry of Energy also confirmed that a drilling vessel has started operations in Block 5, marking the continuation of Cyprus’s efforts to exploit its energy potential.

ExxonMobil and Qatar Energy hold two exploration licenses off Cyprus's southern coast. In 2019, the companies announced a major gas discovery in Block 10, estimated to hold between 142 and 227 billion cubic meters of natural gas – the largest discovery ever made on the island.

An additional evaluation drilling is planned for Block 10, potentially further solidifying Cyprus’s role as a key energy supplier.

ExxonMobil is reportedly in discussions with a consortium led by Italy’s Eni and France’s TotalEnergies to consider pooling resources and discoveries, which could make development efforts more economically viable. This consortium, a rival to ExxonMobil and Qatar Energy, currently holds exploration licenses for seven out of the 13 blocks in the EEZ.

Regional Competition and Challenges

In recent years, neighboring countries like Egypt and Israel have made significant natural gas discoveries in nearby waters, encouraging Cyprus to intensify its exploration efforts. Cypriot authorities estimate that natural gas production for domestic electricity generation could begin as early as 2027.

However, exploration efforts remain a contentious issue due to ongoing disputes with Turkey, which challenges the Cypriot government’s right to explore and exploit resources in the EEZ without first reaching a settlement on the island’s division.

The division of Cyprus dates back to 1974, when Turkish forces invaded the island in response to a coup by Greek-Cypriot nationalists seeking unification with Greece. 

Since then, Cyprus has been divided into two parts: the internationally recognized Republic of Cyprus in the south and the self-proclaimed Turkish Republic of Northern Cyprus (TRNC) in the north, recognized only by Ankara.

Turkey has repeatedly criticized Cyprus’s exploration activities, arguing that they exclude the Turkish Cypriot community from benefiting from the island’s natural resources. This ongoing dispute adds a layer of complexity to Cyprus’s energy ambitions.

Despite these challenges, Cyprus remains determined to leverage its gas reserves to secure its position as a reliable energy supplier for the EU and beyond. 

The collaboration between ExxonMobil, Qatar Energy, and potentially other major players like Eni and TotalEnergies signals strong international interest in Cyprus’s energy potential.

With the prospect of domestic gas production starting within the next few years, Cyprus is positioning itself as a key player in the Eastern Mediterranean’s evolving energy landscape. 

However, the island’s ability to navigate geopolitical tensions with Turkey will be crucial in achieving its ambitions.