Local
articles | 21 February 2013

Developing the booming energy sector through the Cyprus Stock Exchange

The development and enhancement of the energy sector in Cyprus through the securities market and the Cyprus Stock Exchange (CSE) could yield significant economic benefits to the country.

Following the world-class discovery of natural gas in its Exclusive Economic Zone (EEZ), Cyprus is currently in an on-going authorisation process of licensing blocks for the purpose of extracting hydrocarbons from its territory.

Taking into consideration examples of similar cases internationally, the Cyprus Stock Exchange could play a vital role in the efforts to develop the energy sector and raise capital by listing the State Company for Hydrocarbons on the CSE, according to the Director General of the Cyprus Stock Exchange NondasCl. Metaxas.

The move could benefit the wider economy of Cyprus and is a view also shared by other industry experts in recent debates regarding the exploitation of the natural gas discovery.  Nondas Cl. Metaxas has proposed the listing of the State Company for Hydrocarbons on the CSE, saying respective arrangements constitute this practice internationally. More specifically, Metaxas refers to the example of Norway’s StatOil, which is indicative of the direction to be followed in the case of Cyprus.

He said: “Through such an arrangement and the distribution of part of the share capital to both domestic and international investors, it will possible for Cyprus to attract large institutional investors and widen the offered investment products, bringing multiple benefits for the Republic of Cyprus.”

Metaxas argues that the Cyprus National Hydrocarbons Company could emerge as the national institution for the energy interests of Cyprus and in this context it can establish an independent fund (sovereign fund) which will belong to the Republic of Cyprus, where the State will have the ownership of the majority of the capital of Cyprus National Hydrocarbons Company.

“In other countries, based on our investigation, the State still owns the majority of share capital of the equivalent Hydrocarbons Company, whereas the remaining share capital is spread over in a number of international, domestic institutions and private investors, “ Metaxas said.

Another way to develop the sector through the exchange, according to Metaxas, is the issue of securities in the form of certificates representing shares (Depository Receipts) and the admission for listing to the CSE, which could be included in the contractual arrangements formed between Cyprus and the selected hydrocarbons companies licensed to operate blocks in Cyprus’ EEZ.

“With this option, a remarkable energy sector will be established within the CSE market and new products will be offered to both the domestic and international investment community, which will be particularly attractive for investment in region of Cyprus,” said the director general.

The implementation of these proposals would enable the energy sector in Cyprus to have a prominent position in the global securities market and to receive special importance for investment purposes. The CSE says new stock indices and related derivatives products could be created in this sector, such as Futures, Options and ETF’s. Similar arrangements have been made in neighbouring Israel, where the energy sector has allowed companies involved in this sector to develop further. The energy sector has also significantly contributed to the further development of the securities market in the country, attracting international investors.

Metaxas said: “With the implementation of these recommendations, it will be possible to attract international investment funds in Cyprus, specialising in the energy sector. This will add further value to Cyprus’ effort to maintain and further develop as a regional financial centre. The CSE is interconnected with European and neighbouring securities markets and has a very good infrastructure. The utilisation of the CSE in the energy sector as was done in similar cases in other countries will bring direct benefits for the Cyprus economy.”

For more information visit The Cyprus Stock Exchange (CSE) company profile

Following the world-class discovery of natural gas in its Exclusive Economic Zone (EEZ), Cyprus is currently in an on-going authorisation process of licensing blocks for the purpose of extracting hydrocarbons from its territory.

Taking into consideration examples of similar cases internationally, the Cyprus Stock Exchange could play a vital role in the efforts to develop the energy sector and raise capital by listing the State Company for Hydrocarbons on the CSE, according to the Director General of the Cyprus Stock Exchange NondasCl. Metaxas.

The move could benefit the wider economy of Cyprus and is a view also shared by other industry experts in recent debates regarding the exploitation of the natural gas discovery.  Nondas Cl. Metaxas has proposed the listing of the State Company for Hydrocarbons on the CSE, saying respective arrangements constitute this practice internationally. More specifically, Metaxas refers to the example of Norway’s StatOil, which is indicative of the direction to be followed in the case of Cyprus.

He said: “Through such an arrangement and the distribution of part of the share capital to both domestic and international investors, it will possible for Cyprus to attract large institutional investors and widen the offered investment products, bringing multiple benefits for the Republic of Cyprus.”

Metaxas argues that the Cyprus National Hydrocarbons Company could emerge as the national institution for the energy interests of Cyprus and in this context it can establish an independent fund (sovereign fund) which will belong to the Republic of Cyprus, where the State will have the ownership of the majority of the capital of Cyprus National Hydrocarbons Company.

“In other countries, based on our investigation, the State still owns the majority of share capital of the equivalent Hydrocarbons Company, whereas the remaining share capital is spread over in a number of international, domestic institutions and private investors, “ Metaxas said.

Another way to develop the sector through the exchange, according to Metaxas, is the issue of securities in the form of certificates representing shares (Depository Receipts) and the admission for listing to the CSE, which could be included in the contractual arrangements formed between Cyprus and the selected hydrocarbons companies licensed to operate blocks in Cyprus’ EEZ.

“With this option, a remarkable energy sector will be established within the CSE market and new products will be offered to both the domestic and international investment community, which will be particularly attractive for investment in region of Cyprus,” said the director general.

The implementation of these proposals would enable the energy sector in Cyprus to have a prominent position in the global securities market and to receive special importance for investment purposes. The CSE says new stock indices and related derivatives products could be created in this sector, such as Futures, Options and ETF’s. Similar arrangements have been made in neighbouring Israel, where the energy sector has allowed companies involved in this sector to develop further. The energy sector has also significantly contributed to the further development of the securities market in the country, attracting international investors.

Metaxas said: “With the implementation of these recommendations, it will be possible to attract international investment funds in Cyprus, specialising in the energy sector. This will add further value to Cyprus’ effort to maintain and further develop as a regional financial centre. The CSE is interconnected with European and neighbouring securities markets and has a very good infrastructure. The utilisation of the CSE in the energy sector as was done in similar cases in other countries will bring direct benefits for the Cyprus economy.”

For more information visit The Cyprus Stock Exchange (CSE) company profile

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