Greek Cyprus to build gas plant with or without Israel

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 Greek Cypriot foreign minister said. Ioannis Kasoulides said the Greek Cypriot government is continuing talks with Israel, which has also discovered its own offshore gas deposits, on ways the countries can best exploit their mineral reserves. Greek 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 Greek 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 Greek Cyprus' energy plans, but that the construction of the plant "will take place anyhow."

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

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 Greek Cypriot-Israeli energy cooperation.

Kasoulides and Greek Cyprus' Commerce and Energy Minister George Lakkotrypis will travel to Israel next week for energy cooperation talks. Greek Cypriot leader Nicos Anastasiades is to visit Israel later this month. Israel's apology over the incident "doesn't mean Israel is obliged to follow what Turkey is dictating in this region," said Kasoulides.

Turkey says it is the most viable route for gas exports from Israel and Greek Cyprus and has warned it is ready to discuss a "two-state solution" in Cyprus if Greek Cyprus insists on disregarding the Turkish Cypriot rights and moving ahead with its exploration plans.

Speaking on Wednesday, President Abdullah Gül said Greek Cyprus' financial crisis presented an "important opportunity" to end the division of the island. "There is at the moment significant economic crisis on the island. This should be seen as important opportunity ... Because if the island was to unite, there would be greater economic potential," Gül said during an official visit to Lithuania. "There are some restrictions, embargoes on the island,” he continued. “Our suggestion is to lift any and all kinds of restriction or embargo simultaneously so that we can create a new climate for moving forward.”

No to ferrying gas to Turkey

Kasoulides challenged suggestions that Greek 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 his government's sovereign right to exploit its own mineral deposits, despite fierce opposition from Turkey, which says the rights of Turkish Cypriot are being ignored and has warned that it would react strongly to further gas exploration by Greek 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."