Cyprus cannot consider itself an energy hub despite its deposits of offshore hydrocarbons, and as long as the gas remains in the ground, it will never generate the wealth associated with such natural resources, Energy Minister George Papanastasiou said on Friday.

Papanastasiou made the comments when he addressed delegates at the Economist conference ‘Cyprus Investment Summit – A New Chapter at the London Stock Exchange where energy was on the agenda along with banking and investment opportunities, and the Cyprus issue.

The minister spoke alongside John Ardill, Vice President, Global Exploration at ExxonMobil and was candid in some of his remarks, both in his address and during a subsequent Q&A.

“Cyprus has no gas infrastructure. We have a few [offshore] discoveries but without infrastructure these can’t be developed and get to a destination where they can be liquified,” he said.

“If Cyprus has an aspiration to become a contributor to Europe, we need infrastructure but it’s just not there.”

Asked by a delegate if Cyprus would ever become an energy hub, the minister added: “I will be realistic. To me a hub is where the infrastructure is. Cyprus will not become a hub but can become a contributor to Europe’s energy needs.”

Answering a further question about the spin the Cypriot public had been put through for the past ten years over gas discoveries, Papanastasiou admitted that previous governments had possibly overstated how much wealth the island’s gas reserves might bring.

“Wealth only has a value as long as it’s on the market,” the minister said. “As geology, it does not constitute wealth.”

But he said by reducing the cost of energy on the island, would benefit the economy and help generate wealth and growth.

This can come about if Cyprus’ gas finds can be brought onshore and used to replace the heavy cost of fossil fuels, and also as a means to help transition to a future based on renewable energy (RES).

“The high cost of electricity from a single source is unsustainable and any economy that does not have cheap energy will be short-lived, so we need to create a platform for a sustainable economy,” he said.

“The grid is suffering, and certain investments have to be made. We need to create storage coming from renewables. They are all over the place on the grid, so we first need to prepare the grid.”

Papanastasiou described natural gas as a transitional solution. To go to renewables you have to go through the traditional.” On RES solutions, he also made a passing comment that wind farms might not necessarily be a solution for the island as opposed to photovoltaic parks.

He said there was a huge need to reduce emissions as the cost of EU penalties this year would come close to €300 million “unless we do something to reduce our footprint”.

The minister also raised the issue of Turkey and the tensions over Cyprus’ gas finds. He said it was a sensitive issue “but with the new government’s approach to energy we want to provide solutions that are attractive to Turkey so that energy can become a catalyst to resolving the island’s political problem”. He said it could be a tool so that the two parties could sit together, while reconfirming that the gas finds belonged to both communities in Cyprus.

Since taking office, the new government appears to be taking a totally new approach to energy with plans for regional pipelines and other means of ensuring energy independence, including connecting the electricity grid with Europe. Papanastasiou did not get into details during the London conference but said feasibility studies were underway to look at all the options.

Speaking after the minister, ExxonMobil’s Ardill said the company was offshore in Cyprus last year and would be back by the end of the year. The company has interests in blocs 5 and 10, southwest of the island.

“We are in the data acquisition phase,” he said, adding that the next step would be to map that data that would be coming in the next year or so. The company is “hopefully” planning to drill in 2025 and to make more discoveries during this drilling.

“After drilling the next step would be to set up the infrastructure. Once you’ve got the geology figured out, you can move at a fast pace,” said Ardill. “We have big plans and are absolutely invested in Cyprus,” he said.