1. Effective Management of Cyprus’s Gas Reserves – Towards the Cyprus of Tomorrow
Professor Toula Onoufriou
Vide Rector for Academic Affairs
Department of Civil Engineering and Geomatics
Cyprus University of Technology
and
Chairwoman of The Cyprus Hydrocabons Company
3ο Ενεργειακό Συμπόσιο, Κύπρος 2014
Η Συμβολή της Κύπρου στη Νέα Ευρωπαϊκή Ενεργειακή Στρατηγική 1 1 1

2. Introduction – Hydrocarbon Discoveries in Cyprus and Current Status
Initial gas discovery offshore in Dec 2011 in Block 12 by Noble Energy, estimated around 4 trillion cubic feet, further confirmatory drilling
ENI/KOGAS have blocks 2,3,9 seismic surveys, planning exploration drilling to start in 2014
TOTAL have blocks 10,11, seismic surveys, plannng exploration drilling 2015
There are also indications for oil 2 2

3. Significant Opportunity for Cyprus to Reposition Itself
The discovery of natural gas offshore Cyprus coupled with other discoveries in the region is
a significant development for the island and the region
in a time of financial and economic crisis
If the right policies and effective management are put in place
Cyprus’s energy resources can help the country
to emerge from the economic crisis stronger
Cyprus can emerge as an advance economy and knowledge society by
Capitalizing on its strengths
Modernizing existing key areas of the economy
Investing in new strategic areas
Forming strategic alliances to achieve these long term objectives 3 3

4. If we Look at Cyprus
Cyprus has a strategic location in an energy producing region
A European country operating under EU law at the junction of three continents
These new prospects create the opportunity for Cyprus to be established as an Energy Centre
And together with Israel and possibly other energy producing countries in the region it can contribute to the EU energy security
These aspects can provide incentives for the EU, the US and other countries to support the hydrocarbon developments in Cyprus 4 4

5. To capitalize on this tremendous opportunity for our country
A Multifaceted Strategy and Effective Management at Many Different Levels is Required
To capitalize on this tremendous opportunity for our country
In order to achieve these objectives
And raise the country to another level through a sustainable development and growth strategy 5 5

6. Key elements of Management Strategy
Effective Management of Cyprus’s Gas Reserves Towards the Cyprus of Tomorrow
Manage Findings and Developments
Develop the Right Business Environment
Strategies and Policies
Sustainable Economic Growth
Discoveries so far
Further licensing
Exploration and production
Regulatory regime
National Oil Company
Export infrastructure
Interim gas supply
Infrastructure for domestic gas distribution
Stimulate internal gas market
Energy strategy integrating renewables
Safeguard against Environmental Disasters
Investment Fund
Sustainable Development of Cyprus Economy
Human Capital Development
Key elements of Management Strategy
Strategic International Alliances 6 6 6 6

7. Key Elements of the Management Process
Regulatory regime for governance of upstream and downstream operations
Cyprus Hydrocarbons Company
Proceed with the infrastructure developments to support these activities
Important to complete these process learning from best international practice
This should build confidence with interested international investors and attract high caliber companies to operate in Cyprus 7 7

8. Export Infrastructure to Support Export Activity of Natural Gas
Gas supply will largely exceed domestic demand, Cyprus is developing an export strategy
This is likely to involve liquefied natural gas (LNG) facilities rather than pipelines or electricity cables, given
technical and geographical constraints,
cost considerations,
and the need for flexibility in the volumes of gas processed and transported and in reaching international markets
Expandable LNG plant, tolling system, offering third party access
An LNG pant will be of strategic importance to Cyprus towards establishing as a Regional Energy Hub 8 8

9. Interim Solution for Gas Supply
Cyprus also needs to find an Interim solution for gas supply until Cypriot gas comes on stream
For guaranteeing the country’s fuel and power requirements and reduce prices
By importing natural gas for domestic use until gas from Block 12 arrives on the island
This is currently under examination
All options need to be assessed to arrive at a viable solution 9 9

10. Environmental Impact – Safeguard Against Environmental Disasters in the Region
Most important element - The quality in all our operations
Best international practice to be followed in all our operations
Establish a regulatory framework to monitor and oversee the work of the companies to ensure that these best practices are followed
Work with major international companies who follow best practice
Training of our staff responsible for various aspects of developments to high standards
Establish collaborations and procedures which deal with accidents in case these occur in order to minimize any catastrophic effects
Collaborations with other countries in the area e.g. Israel 10 10

11. Developing an Investment Fund
Learn from successful examples form oil producing companies like Norway and avoid mistakes failures of the past
This needs to be managed independently from current government policies
Invest wisely to achieve the short and long term benefits and objectives
Rather than current budget support or plugging holes in the economy
Think strategic and long term
Learn from other successful experiences e.g. long term investment in research and technology development in Norway and currently Brazil 11 11

12. Sustainable Growth of Cyprus Economy
If we look at the Cyprus’s economy today this is limited
To tourism
and business/ financial services
The potential revenues from the hydrocarbon explorations
Need to be used wisely to bring about many
short and long term and sustainable benefits for the country’s economy
This will need to include investment in:
Improving infrastructure
Public services
Industrial competitiveness
Modernising and strengthening key areas of the economy
And building new strategic area 12 12

13. Modernizing key Areas of the Economy
Strengthening existing areas such as
Tourism
Business
Shipping
Medical services 13 13

14. Building new strategic areas
Build new strategic areas such as
Education and training
Research and technology development
Establishing Cyprus as an education, training, research and technology development center for the region
Research and Technology Development 14 14

15. “New National Framework for Research Innovation and Entrepreneurship”
Research, Innovation and Entrepreneurship Framework
Presentation of the National Committee for Research Innovation and Technology Development Proposals for a
“New National Framework for Research Innovation
and Entrepreneurship”
To the President and the Government of Cyprus
26 March 2014
Presidential Palace
Research and Technology Development
Next Stage - IMPELEMENTATION 15 15

16. Building new strategic areas
Also tackling new areas of strategic importance for the future for the country, the region and internationally
These may include areas such as:
Conventional energy and renewables
Water shortage
Climate change
Energy efficient buildings 16 16

17. Developing the Human Capital
Key Element to this Developments and their Success is Developing the Human Capital
A lot of these developments can be developed utilizing the significant human capital of highly educated workforce based on a strong culture for education in Cyprus
A workforce that is currently underutilized in Cyprus
That can be channeled in these areas so that the country can emerge as an advance economy and
A knowledge society with strong capabilities in education, training, research and technology development for the benefit of Cyprus, the EU and the region  17 17

18. This Opens up Many Opportunities for International Collaborations
With leading centers in Europe, the US, Israel and others
Such as academic, research, industry organisations
To bring expertise in Cyprus to jointly build these areas for the future for mutual benefit 18 18

19. Developing the Human Capital Potential
Training objectives
Training a new generation of young professionals and entrepreneurs who will have the knowledge and skills to work and thrive in this new environment
Training the staff that will man the various government and other bodies that will support this industry (National Oil Company, Regulatory Bodies, Ministries etc)
Train skilled workers to support the various operations offshore and onshore related to the hydrocarbon industry (e.g. major oil companies, LNG plant, specialized and other support services etc)    19 19

20. Developing the Human Capital Potential
 Combination of actions required
Training in Cyprus Universities, Colleges etc
Training abroad, establishing a number of scholarships in key areas to study at top universities overseas
Attracting some key experienced people from abroad to come and work in Cyprus (Cypriots and others)
Select the high caliber young and more experienced staff to benefit from internships with major international companies/universities abroad
Working with overseas universities and training centres to develop the education and training capabilities in Cyprus 20 20

21. Need to Have an Outward Looking Policy with Strategic International Alliances
Strategic alliances at various levels government, industry, universities etc to achieve the best in terms of:
National security
Environmental safety
Joint infrastructure collaboration
Human capital development
Education and training
Research and technology development 21 21

22. Political Problem in Cyprus
It is hoped that in parallel with these developments
These prospects can form the catalyst for a solution to the political problem
So that all communities in Cyprus can benefit from these resources
Also contribute to political stability in the region 22 22

23. Key elements of Management Strategy
Effective Management of Cyprus’s Gas Reserves Towards the Cyprus of Tomorrow
Manage Findings and Developments
Develop the Right Business Environment
Strategies and Policies
Sustainable Economic Growth
Discoveries so far
Further licensing
Exploration and production
Regulatory regime
National Oil Company
Export infrastructure
Interim gas supply
Infrastructure for domestic gas distribution
Stimulate internal gas market
Energy strategy integrating renewables
Safeguard against Environmental Disasters
Investment Fund
Sustainable Development of Cyprus Economy
Human Capital Development
Key elements of Management Strategy
Strategic International Alliances 23 23 23 23

24. By Adopting the Right Strategies
Cyprus can emerge from the current crisis with a more diversified economy built on its strengths
With a strong oil and gas industry and related services
And building new capabilities and strengths in other strategic areas for the economy 24 24

25. Cyprus Can Develop Into an Energy Hub
Both in terms of
Producing, processing and exporting gas to Europe thus contributing significantly to Europe’s energy security
And also becoming a centre for education, training, research and technology development serving the region and Europe in key strategic technological areas for the future
Such developments will be of significant benefit for the country, the region and Europe 25 25

26. Thank you Thank you Professor Toula Onoufriou
Vide Rector for Academic Affairs
Department of Civil Engineering and Geomatics
Cyprus University of Technology
and
Chairwoman of The Cyprus Hydrocabons Company
3ο Ενεργειακό Συμπόσιο, Κύπρος 2014
Η Συμβολή της Κύπρου στη Νέα Ευρωπαϊκή Ενεργειακή Στρατηγική 26 26 26