Cyprus has attracted increasing prominence as an international financial centre since its 2004 full accession into the EU. With a fully EU compliant taxation system, a highly educated workforce and open economy, the island has featured in the structures of an increasing number of large MNCs, including leading oil and gas Groups.

The island not only lies at the crossroads of big international energy routes but in all probability is surrounded by substantial oil and gas resources, a significant part of which falls within the Cyprus Exclusive Economic Zone. Assessments by USGS bring the level of undiscovered oil and gas resources in the Eastern Mediterranean to a total of 3.4 bbl for oil and circa 345 tcf for natural gas. Israel has already announced findings at Dalit, Tamar and Leviathantotalling 30tcf of natural gas and still unproven quantities of oil. Even more significant undiscovered hydrocarbon resources are said to exist at the west of the island.

To date 13 exploration blocks have been defined by the Republic of Cyprus at the south of the island following international bilateral agreements with Egypt, Lebanon and Israel. Substantial geological and geophysical data has been gathered the last few years for a number of these blocks and are available in the form of Multi Client Seismic Surveys and Interpretation Reports.

The Government of the Republic of Cyprus through the Energy Service of the Ministry of Commerce, Industry and Tourism and other government agencies has put together a number of Laws and Regulations since 2007, governing hydrocarbon exploration and exploitation in Cyprus. Cyprus has completed a 1st licensing roundfor exploration rights in August 2007 with one exploration licence awarded for Block 12 to Noble Energy International Limited. Drilling for the first exploratory well commenced September 2011.

On 11/2/2012 the Government of the Republic of Cyprus announced the commencement of the 2nd licensing round. Fifteen companies / consortia made up of twenty nine international companies and joint ventures from 15 different countries, including the USA, Norway, Canada, France, Italy, Australia, South Korea and Israel, submitted their bids for most of the remaining twelve blocks within the Cypriot EEZ.

In December 2012, the negotiations of the government with the French –Russian consortium of Total-Novatek and Gazprombank over exploration rights in offshore block 9 of Cyprus’s EEZ were terminated due to lack of progress in the discussions. The Ministry of Commerce, Industry and Tourism (MCIT) then commenced direct negotiations for block 9 with the consortium ENI–Kogas. The MCIT also embarked on negotiations for blocks 2 and 3 with the same consortium. It was also resolved that the Ministry would commence negotiations with Total for blocks 10 and 11.

On 24 January 2013, the Republic of Cyprus signed contracts granting the licences for the exploration of blocks 2, 3 and 9 to the consortium ENI- Kogas. The reported signature bonuses arising from the signing of these contracts amounted to €150m.

On 6 February 2013, the contracts for the granting of licences for the exploration of blocks 10 and 11 were signed with Total resulting in a signature bonus of €24m to the Republic of Cyprus.

Following the awarding of licenses to blocks 2, 3, 9, 10 and 11, an extension of 180 days was granted for the completion of the 2nd licensing round for the remaining unallocated blocks in the Cyprus’s EEZ.

On 11 February 2013, the government signed agreements for the transfer of 30% of Noble Energy’s exploration rights in block 12, to the Israeli companies Delek Drilling and Avner Oil Exploration.