Cyprus inked a deal with a US-Israeli partnership on Wednesday to build a liquefied natural gas plant on the island to exploit untapped energy riches.
A memorandum of understanding was signed between Cyprus and a partnership comprising US-based Noble Energy International and Israeli companies Delek Drilling and Avner Oil Exploration to build a LNG facility at Vassiliko near the southern resort town of Limassol.
"The signing ... represents the next milestone on the road map for the exploitation of gas reserves in Cyprus' Exclusive Economic Zone," said Cyprus Energy and Commerce Minister George Lakkotrypis at the official ceremony.
He said the LNG plant constitutes "the fundamental and necessary infrastructure that will allow the export of Cypriot natural gas to European and global markets".
Building a multi-billion euro LNG plant is seen as the biggest infrastructure investment project in the island's history
Earlier this month, Noble started confirmation drilling off the southern coast to ascertain whether there is enough untapped gas to make the venture commercially viable.
Based on initial test drilling in 2011, the estimated amount of gas in Block 12 is 5-8 trillion cubic feet (142 billion-227 billion cubic metres), with a mean of seven trillion cubic feet, the Houston-based company said.
Noble owns 70 percent of the drilling project, with Israeli partners Delek and Avner each holding 15 percent.
The almost bankrupt Mediterranean island is hoping its untapped offshore energy resources can pull it back from the financial brink.
It hopes to commercially export its gas, and maybe oil riches, by 2020.
The eastern Mediterranean has been a hive of exploratory activity, with the Cypriot government granting permits to international prospectors after Israel discovered massive offshore gas deposits in 2010.
Israel is seeking to export around 40 percent from its own gas fields and Cyprus is seen as an ideal conduit to the European market.
Head of US Noble Energy John Tomich said the agreement constitutes an "important step" in the cooperation of Cyprus with its partners, leading to the full exploitation of natural gas reserves to be found in block 12.
Delek Drilling and Avner Oil Exploration's Gideon Tadmor said the MoU showed a combined commitment to go ahead with the construction of the LNG plant.
The government has played up the potential of the gas windfall estimating it at 60 trillion cubic feet, but this figure has yet to be verified through exploration.
Earlier this year, Cyprus signed additional agreements with French energy giant Total and a partnership of ENI of Italy and South Korea's Kogas for oil and gas exploration in its waters.
Reportedly, Total is also interested in having a stakehold in LNG facilities to export from Cyprus.