You have been appointed at a time when Cyprus faces serious economic challenges, what are your key priorities as the new Minister of Energy, Commerce, Industry and Tourism?
In the short-term, we need to focus on measures to boost the economy and control the current recession. Cyprus depends heavily on tourism, so a key priority is to enhance both the quality and the quantity of our product. Although we had a dip in tourism bookings over March and April, we have bounced back and fortunately our numbers have gone back to those before the crisis. Another priority is to enhance the reputation of Cyprus internationally and to restore our credibility. We are working hard to relay the message globally that Cyprus is stable and we are open for business. Our banking sector has been severely hurt, but with the right priorities and actions we can ensure Cyprus remains an attractive investment destination. In the mid-term, it is crucial to advance projects that have been in the pipeline for some time, such as marinas, golf courses, photovoltaic parks and other large development projects. The top priority for the long-term is to develop our oil and gas industry to properly manage this new potential income for Cyprus.
Your Ministry oversees sectors that contribute significantly to the economy of Cyprus, despite the current economic climate, what opportunities do you see for growth and investment in Cyprus?
There are still various investment opportunities in tourism. We are focusing on diversifying the product and extending the season to 12 months. Currently we have capital assets such as hotels sitting idle for three to four months and we need to utilise them all year round. We have investment flowing into the marina projects and golf courses – and new investment opportunities will emerge from the planned resort casinos. We are aiming to advance fast and estimate we will have a limited number of licences. We are now consulting with major casino operators to see what model would be most viable for Cyprus. This new industry is attractive to investors and we are looking at developing one or more casinos as part of thematic parks including conference centres, spas and hotels to attract all kinds of visitors.
The energy sector as a whole has great potential, and the developing oil and gas sector will provide great opportunities for companies to set up regional bases in Cyprus. We are at a critical milestone today, as in addition to our own hydrocarbons exploration, neighbours Israel and Egypt are advancing fast and Lebanon is starting its own exploration activities. Cyprus is strategically positioned as a country to attract logistics, petrochemical and other oil and gas companies to set up on the island – and we are seeing increased interest from big multinationals. Our location establishes the island as a gateway between Europe and the Middle East, as well as Africa and Asia.
The development of the renewable energy sector also provides investment opportunities, as we are planning to bring photovoltaic energy to 15,000 Cypriot households over the next three years. We are seeing an industry evolving around renewable energy, which will also help us to meet our EU targets.
In December 2011, Noble Energy announced a world-class natural gas find estimated between 5 and 8 trillion cubic feet (tcf) in Cyprus’ Exclusive Economic Zone. Cyprus has since awarded licences for several of its 13 offshore blocks. How significant is this find for the country?
The significance of the hydrocarbons discovery is huge, because of its potential economic and geopolitical impact. Many countries are now undergoing a financial crisis, but we have the opportunity of an economic boost from our hydrocarbons reserves. It will create jobs, inject new capital into the economy and help us to get back on our feet. We are also now integrating oil and gas related degrees into our education system to create a skilled domestic labour force to support this new industry and create more employment. The benefits of this new industry will filter into the entire economy of Cyprus.
After exploration licences were awarded for several of Cyprus’ offshore blocks, you announced plans to build a Liquefied Natural Gas (LNG) terminal for international export and domestic distribution. What is the current progress?
The decision has been taken to construct a Liquefied Natural Gas (LNG) plant and we are now in the pre-design phase. We will be signing Memorandums of Understanding (MOU) with Noble Energy – who discovered the hydrocarbon reserves in block 12 – and potentially with other companies interested in participating in the LNG terminal. We will be giving priority to the producers and also to the potential buyers of our natural gas. We are also now advancing on the upstream production and Noble Energy will begin its appraisal drillings in June, which will determine the quantity and quality of the gas reserves in block 12 by October 2013. Energy giants Eni and Total are also advancing in the exploration of their awarded blocks, so we are going through exciting times. As for domestic distribution, the plans are that it will precede the export facility, something that will make the Cyprus economy more competitive.
Neighbours Israel and Lebanon are also looking to develop their energy sectors and to export natural gas. What kind of cooperation do you envisage with these countries and could Cyprus take a leading role in transforming the Eastern Mediterranean into an energy hub?
Cyprus is geopolitically well-placed to be the forerunner in this project, but we also need to be economically well-positioned to achieve this. We are in discussions to increase our collaboration in terms of energy with all our neighbours who are in the process of exploring hydrocarbon reserves. We need to work together, because we all agree that our efforts in the Eastern Mediterranean basin can be a catalyst for stability in the region – and stability brings investment. If we can achieve stability in the Eastern Mediterranean most major oil and gas companies will be interested in participating in these projects. Our efforts are already boosting additional related investments, establishing Cyprus as an ideal hub for companies to service the region and neighbouring countries thanks to our political stability and the open channel we have with both Israel and Lebanon.
Australia and the US are set to become the largest liquefied natural gas (LNG) exporters in the world in the next 5 to 10 years. Cyprus is still in the early stages of developing its energy sector, are you concerned the surge in LNG exports by Australia and the US could compromise Cyprus’ potential LNG export revenues?
While the supply of natural gas could potentially increase, we also see that demand is increasing. We are monitoring the worldwide developments of supply and demand, and we take these into consideration as we progress with our plans. We have our strategy and we are pursuing it vigorously. Currently, demand completely exceeds supply and both Asia and Europe remain significant potential markets for us. The decision to build an LNG terminal and not a pipeline ensures we have the flexibility to export to the best markets worldwide.
With over 340 days of sunshine a year, Cyprus is one of the highest users per capita of solar water heaters in Europe. How is the renewable energy sector being developed and what opportunities do you see for foreign investment?
The development of storage options for renewable energy is where we need investment. One of the challenges many European countries face today is how to integrate renewable energy into the grid while sustaining the stability of the system, as renewables are often unpredictable sources of energy. Proper storage systems will help stabilise the flow of electricity to the grid. Wind and solar systems are definitely some of the best options for Cyprus and foreign investment, thanks to our climate and abundance of sunny weather.
Cyprus has proven to be resilient in the face of adversity, how long do you think it will take for Cyprus to recover from this crisis and how do you see the country developing over the next five years?
Things will get worse before they get better, but if we take the right decisions and initiatives I strongly believe we will be on the road to recovery in the next two years. Unemployment will rise and there is a recession, but we have prospects for a speedy recovery. We have a strong shipping and tourism sector and a new booming energy sector with renewables and oil and gas. Thanks to these industries and the investments they attract, the recovery will be fast as we can create the necessary jobs, investment environment and structures to attract more foreign investment. While it is going to be tough, I am optimistic we will be able to recover faster than many anticipated.
What message would you like to give to the international business community?
We have our priorities clearly set out, we welcome all investors to Cyprus and we are determined to turn the country around. We support and promote private initiative and will implement the necessary infrastructure to expedite processes to ensure projects go forward. Cyprus is open for business.
BIO
Before assuming office as Minister of Energy, Commerce, Industry and Tourism in March 2013, Yiorgos Lakkotrypis was Managing Director for Microsoft Cyprus and Malta, and subsequently Public Sector Director at Microsoft Central & Eastern Europe. A Fulbright scholar, Lakkotrypis also holds a Mathematics and Computer Science (BSc) degree from the University of Keele and completed his MBA at the University of Colorado. In 1991 he joined Joannou & Paraskevaides overseeing the company’s IT systems in Benghazi, Libya, and later worked in sales at IBM Cyprus for six years. Lakkotrypis was a member of the Board of Directors of the Cyprus Investment Promotion Agency (CIPA) from 2008 to 2011, and was appointed a member of the Board of Directors of the Natural Gas Public Company (DEFA) in 2009, a position he held until his appointment as Minister of Energy, Commerce, Industry and Tourism.
