President Nicolas Anastasiades promises bonds linked to natural gas revenues, but experts question energy reserve potential
Amid the panic caused by the Cyprus bailout plan, Cypriots employed in the island's oil and gas industry may be approaching their work with renewed vigour this week.
Some experts believe Cyprus could be sitting on natural gas reserves worth up to €300bn (£257bn), a bonanza for a country with an estimated GDP of €15bn.
These gas fields have come under the spotlight after Cyprus's president, Nicolas Anastasiades, promised that people who kept deposits in domestic banks for the next two years would be given bonds linked to revenues from natural gas.
Traders said they were not aware of any such bond but could see how it would work as a sweetener for customers. In the same way, investors in Greek bonds were offered a so-called GDP warrant for taking part in a debt swap last year, which will pay out if and when Greece's economic fortunes improve.
But the Cypriot gas reserves have not been proved. Back in 2011 the US energy company Noble announced a successful well off Cyprus, in a field estimated to hold at least 7tn cubic ft of natural gas. That prompted a flurry of interest in Cypriot waters, which, analysts say, could hold another 30tn cubic ft of gas, but there have yet to be any more discoveries.
The flood of money the Cypriot government envisages coming from these fields will also be painfully slow in coming. Vincent Forest, Cyprus analyst at the Economist Intelligence Unit, said: "When Anastasiades said we can guarantee these sweeteners in two years, I seriously doubt this would be effective.
"It would take between seven and 10 years to have the first revenues from gas exploitation so you can't guarantee anything in two years, otherwise you give people shares in something that doesn't exist."
The situation is complicated further by disputes with Turkey – which has a strong bargaining position, as any gas pipeline would have to cross its territory – and Egypt, which questions Cyprus's claim to the gas fields.
Forest said: "You can't bet on gas for a country such as Cyprus. It's a small country, it's a weak country, it's got very difficult relations with Turkey. Most important you have the Egyptians claiming rights to some of the gas reserves. It's a huge imbroglio."
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