FUTURE revenues from natural gas deposits in Cyprus could be taken into account in bailout talks for the indebted island, Eurogroup president Jeroen Dijsselbloem said yesterday.
But he cautioned that before such revenues could be included in calculations for making the country's debt sustainable, it was necessary to find out more about how much they could total.
“Let's first wait for some first drillings, and see how much it is, what type of gas it is, what kind of quality before we possibly include it in a programme,” Dijsselbloem told the Dutch Lower House in The Hague.
Money from the gas could be used to service Cypriot debt through a special account, he said.
“A segregated account is possible, which, for instance, would be used to transfer the gas' proceeds to,” said Dijsselbloem, making a comparison with Greece where a similar scheme is made for certain funds.
Eurozone officials have said that currently available estimates for the revenues varied between 100 and 300 percent of Cypriot gross domestic product, which is around €18 billion.
And according to a recent report by the Royal Bank of Scotland, the island sits on potentially potentially huge energy wealth in excess of €600 billion.
Cyprus applied for emergency loans from the EU and the IMF last June, after the island’s banks were hammered by a write-down of Greek sovereign debt.
Officials estimate the country will need about €17.5 billion, roughly equal to the island's output.
Nicosia is adamant that a preliminary deal struck with prospective international lenders does not ‘mortgage’ the island’s future proceeds from gas.
The agreement provides for the establishment of a resource fund to receive and manage the public revenues of offshore gas exploitation. It goes on to note that the inflows and outflows should be established as part of Cyprus' budgetary framework, “giving due respect to the need to develop the hydrocarbon industry, including the necessary infrastructure, the importance of bringing Cyprus' public debt on a steady downward path and the need to invest for future generations.”
Independent presidential candidate George Lillikas said last night that Dijsselbloem’s remarks were yet another sign that Cyprus’ gas proceeds risk being sucked into paying off the national debt.
Lillikas said Cyprus should act now to monetize its gas reserves (yet to be proven) in order to disengage them from any future bailout.