Cyprus economy (sector: oil and gas)

Abstract

Natural gas and energy in general, is a sector that might have a huge impact on the economy of a country. This is what is also expected for Cyprus as the discoveries of natural gas allow the country to dream that this sector will be a game changer for the country’s economy. Currently, services, tourism, and maritime transportation are the three pillars of the Cypriot economy. These three sectors contribute more than 80% on the GDP and employ also about 80% of the active population. When Cyprus will be in the position to start exporting natural gas to other countries, these GDP allocations are expected to be shifted as the profit expected from natural gas exploitations is estimated to be remarkably high and many new job positions are expected to open. There are many obstacles in Cyprus’s way though to make this dream come true. For this reason, the dissertation will not be analyzing only the energy sector in the economy, but it will also emphasize on the geopolitical impact this sector will have as these two elements are corelated, and they also affect the decisions the country needs to make in order to make the most beneficial choices. According to specialists, Cyprus will start earning profit from this sector in 8‐10 years from today, therefore this research will be mostly a conjecture about how oil and gas will affect the economy of Cyprus in the near future. On July 9th, 2020, a foundation laying ceremony of LNG installations in Vasilikos took place. The total cost of this project is estimated to be around €289 million. One of the key questions that will be attempted to be answered under this study, is if the decision of the government of Cyprus to proceed with the construction of an LNG terminal is the right approach or if it should have proceeded with other alternative options.