Cyprus Mail

Our View: No rational reason for third licensing round

THE GOVERNMENT announced on Tuesday its decision to proceed with the third licensing round for oil and gas exploration in Cyprus’ EEZ. It instructed energy minister Giorgos Lakkotrypis to “submit the necessary proposals to the Council of Ministers so that the decision could be implemented as soon as possible.”

Anticipating there would be questions about the timing of the decision, which seems ill-advised both politically and economically, unnamed sources claimed big interest had been expressed about licensing during last month’s World Economic Forum at Davos. Sigmalive quoted unnamed sources as saying “all the work had been done at Davos” where President Anastasiades had a meeting with the head of the Italian energy company ENI that already has a drilling concession for a block in the Cyprus EEZ.

It is rather difficult to believe there was great interest in Davos given the falling world oil and gas prices, which make drilling and exploration much less attractive for big companies. If anything, the state of the world market would suggest this was the worst possible time to embark on a new licensing round as bids are certain to be low and interest limited. Would it not have been much wiser to wait for the world market to pick up before taking any decision?

It was also an unwise decision politically. At a time when talks to solve the Cyprus problem are supposedly making progress and there are expectations of an agreement being reached this year, why has the government decided to have a licensing round that could put the peace process at risk? Everyone knows how Turkey reacts to any initiative regarding our EEZ by the Cyprus government. Ankara’s hostile reactions are unjustified but they are a given which makes the decision all the more difficult to understand. Could the government not have waited a few months to see how the talks had progressed before announcing this decision?

Opposition parties have applauded the decision. DIKO on Tuesday pointed out that it had urged the government to proceed urgently with a new licensing round at an energy seminar it held on Saturday and felt vindicated by the announcement. But, like the government, it failed to offer one rational reason why this was regarded as the right time to proceed. Why had it made such a demand from the government?

As nobody has provided a plausible reason for the decision we would venture to guess that it was dictated exclusively by electoral considerations. We have parliamentary elections in three months and the government hoped to give DISY a boost by being able to boast that it had initiated a third licensing round, which is considered a vote-winner. After all, populist considerations are what determine policy in Cyprus.

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