Cyprus will be assuming the Presidency of the Council of the EU during the first half of 2026. In order to enable discussion of the aims and priorities of the incoming presidency, as well as EU’s most challenging policy areas, the Trans-European Policy Studies Association (TEPSA) and the Cyprus Centre for European and International Affairs organised a conference in Nicosia that included energy challenges in Europe, but also in Cyprus.

The presidency will be taking place in an age of increasing uncertainties; at a time when the transition to a decarbonised global economy is behind schedule, proving to be slower than originally envisaged and possibly losing momentum. At the same time, Europe is facing economic and competitiveness challenges and inevitably investment in clean energy is now competing with the need to invest in defense that has become top priority. In addition, European voter anger due to high energy prices has been increasing, bringing with it short-termism and a swing to the far-right.

This article examines energy issues and challenges important to Cyprus, that are likely to be addressed under the limelight of the presidency. 

Progress and challenges

Cyprus is progressing energy development on many fronts:

  1. It is getting closer to gas exports to Egypt from the Cronos and Aphrodite gasfields
  2. In July ExxonMobil announced the discovery of about 142 bcm gas in the Pegasus-1 well in Cyprus’ block 10. Together with the earlier discovery, Glaucus, they are estimated to hold 225-255 bcm gas in place
  3. Renewable energy generation reached 23 per cent in 2024
  4. On October 1 Cyprus launched its competitive electricity market based on EU’s target model
  5. The scheme to promote rooftop solar was launched in 2024 and has been met with great success

But Cyprus is also facing challenges:

  1. Electricity prices and carbon emissions remain stubbornly high
  2. Cyprus needs battery storage and upgrading of its electricity grid
  3. Curtailment of renewable electricity reached 29 per cent in 2024 and is increasing
  4. The Vasilikos LNG import project, that will bring electricity prices down significantly, is still facing challenges, with completion unclear
  5. The Great Sea Interconnector, that will connect Cyprus, Greece and Israel through an electricity cable is also facing a challenging time. However, the positive news is that the governments of Cyprus and Greece are now working closely with the European Commission to take the project forward.

Developments in Cyprus’ EEZ

Exploration in Cyprus’ EEZ started in 2008, with the first discovery, the Aphrodite gasfield, made in 2011. Altogether, six discoveries have been made with estimated gas reserves in the range 480-580 bcm, enough to replace Russian pipeline gas supplies to the EU in 2024 for over 15 years.

One of the challenges Cyprus is facing is that Turkey claims its continental shelf extends to the west and south of the island. Turkey has devised its own maritime delimitation that, in effect, does not recognise the right of islands to possess EEZs. Turkey actually drilled in Cyprus’ blocks 6 and 7 between 2019 and 2020, but did not make any discoveries.

None of the discoveries made so far in Cyprus’ EEZ lie in areas claimed by Turkey, but Turkey is pushing for Turkish Cypriot rights to the island’s energy wealth.

Following the election of Tufan Erhurman as Turkish Cypriot leader, these issues are likely to resurface during Cyprob negotiations that will coincide with the presidency period.

Hot off the press is the news that deals for the development of the Cronos gasfield and export of its gas to Egypt were signed last week, with the Final Investment Decision (FID) scheduled by end 2025. First gas is expected before the end on 2027.

This is good for Cyprus, in that after many years of hopes and disappointments since discovery of the Aphrodite gasfield in 2011, Cyprus is about to become a gas exporter. It is also good news for Egypt. Since peaking in 2021, Egypt’s gas production has declined by 43 per cent, leaving the country dependent on imports of expensive LNG and gas by pipeline from Israel.

In parallel, the Aphrodite gasfield is being developed based on the MoU signed early this year in Egypt, with an FID expected to be taken end 2027 and gas production and export, planned to start in 2031.

However, commerciality is still unclear and resolution of the claim by the Israeli Ishai group that Aphrodite extends into the Israel EEZ, entitling them to a share of the gas, is still pending.

The discovery of Pegasus this year increased ExxonMobil’s gas reserves in block 10 to between 225-255 bcm.

ExxonMobil is taking a cautious approach, keeping all its options open. It is unlikely that it will home in to a preferred development plan that quickly and certainly not before appraisal drilling of Pegasus. Its stated preference is to develop a stand-alone liquefaction plant at Vasilikos, but that requires more gas.

EEZ delimitation

The East Med is at the centre of overlapping and conflicting EEZ claims and disputes. The most glaring one is Turkey’s continental shelf definition.

Turkey has not signed or ratified the UN Convention on the Law of the Sea (Unclos). Its maritime claims are based on a principle of”proportionality of coastlines”, devised and recognised only by Turkey, on the basis of the length of its mainland coastline.

Its approach is based on a ‘Mainland-to-Mainland Delimitation’, that results in a formula where Turkey seeks a median line drawn between mainlands, effectively ignoring the full potential EEZ claims of islands that would be granted under Unclos.

Turkey’s primary contention is that islands, including Cyprus and Crete, should only be entitled to limited maritime zones, mostly to territorial waters, and have a reduced effect in delimitation negotiations.

This is the basis of its ludicrous agreement with Libya that claims rights over a zone that cuts the East Med in two. Turkey is now using this to claim that any pipelines, electric or communication cables require its permission to cross this zone.

Two weeks ago, Greece’s Prime Minister Kyriakos Mitsotakis proposed a five-party forum to discuss the delimitation of maritime zones between Greece, Egypt, Libya, Turkey and Cyprus.

Turkey’s Foreign Minister Hakan Fidan responded in an interview suggesting that differences with Greece can be resolved through dialogue and peaceful means.

With the US becoming more deeply engaged in this process, through the active involvement of Trump’s senior advisor Massad Bulos, there could be some traction.

It is positive that all sides recognise the need for solutions and hopefully this time round they will get there. The catalyst could be what the US does, but the EU also has a role to play.

Dr Charles Ellinas, @CharlesEllinas, is a councilor at the Atlantic Council