This is an extremely interesting story if you have been following developments in Cyprus. For me, it is a RECOMMENDED READ from the Cyprus Mail.
For the first time, I have seen the EC admit that Cyprus is strategically important to the EU. Let me cite the critical words:
The European Commission has said Cypriot gas could play an important role in diversifying supplies and in improving room for negotiation with Russia, but its development is complicated by Turkey and the Cyprus issue.
We now have three distribution routes for offshore gas that have been proposed in recent months. There is a pipeline to Turkey which would be the cheapest but has been rejected for political reasons. The second and currently most favored is the building of gas processing plant in Cyprus; this has been proposed by the Cyprus Government and last week we heard that Israel may be interested in joint ownership – Israel too has enormous offshore gas field and is looking at options for exporting. It will be interesting to see how the third option of a Cyprus-Greece pipeline develops.
Presumably, the Cyprus Government will still prefer to build a gas processing plant in Cyprus for strategic reasons as this will enable Cyprus (and possibly Israel) to export gas by sea to important Asian markets. Cyprus will not want all her exports (via a pipeline to Greece) directed at Europe from a strategic pricing pricing perspective. However, Cyprus will need to finance the $5 billion plus plant perhaps without help from the EC which will be challenging.
On the other hand, an EC financed pipeline to Greece has other advantages for Cyprus. Cyprus would have the political weight of the EC focused on countering the increasing loud Turkish claims to a share of the gas.