Successful Busines 5

. . . .

.

Cyprus-Russian Successful Business magazine 5 - 2012

www.cyprusrussianbusiness.com

:

30

32

38

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- 2012

: ,

P.I.O.

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: Noble Energy . , , . .

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29

3 Successful Business

Investment Forum Russia-Cyprus . 74


, 5 (- 2012)

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ExEcutIvE summarIEs

This is a special section for businessmen who do not speak Russian. At the end of the magazine there are summaries (in English) of all major articles of the issue.

6

, 5 (- 2012)

Cyprus Airways 2011 1,3

115

, , , -

: , , . !

, , ,Andreas Neocleous & Co LLC

Christos Floridis Advocate, Senior Associate,

Head of European Affairs Department,

Andreas Neocleous & Co LLC

. , , Deloitte Cyprus

Pieris M. MarkouPartner,

Tax Practice Leader, Deloitte Cyprus

, -

Panayiotis Loizides Secretary General,

Cyprus Chamber of Commerce and Industry

Soulis MalecosEx-Chairman,

National Associations Council / EACA

Director, Grandad Ltd

, Grandad Ltd

Loucas LoucaMinister of Justice, Republic of Cyprus

Tony ChristodoulouFounder

and Managing Director, Action Global Communications

, Action Global Communications

, Navigator Consulting Group

Philip AmmermanConsultant,

Managing Partner, Navigator Consulting Group Ltd

I

A

F

L

M

M

L

M

Sofoklis Aletraris Minister of Agriculture of

the Republic of Cyprus

A

D

M

(DEFA)

Costas Ioannou President,

DEFA

CIPA,-

Christodoulos Angastiniotis President, CIPA,

Vice-president, CCCI

, ,Chrysses Demetriades & Co. LLC

Christos MavrellisPartner,

Head of the Company & Commercial Department

Chrysses Demetriades & Co. LLC

, - Fashion TV Russia

Ekaterina Melas, Consultant,

Ex-president, Fashion TV (Russia)

Our Contributors


-


, 5 (- 2012)Our Contributors

, -

Phidias PilidesPresident, Cyprus Chamber of Commerce and Industry

Alekos OrountiotisChairman,

Cyprus Tourism Organization

Vyacheslav ShumskyAmbassador

of the Russian Federation in Cyprus

, Alpha Bank Cyprus

Costas Stylianou Head of International Division,

Alpha Bank Cyprus

, (EAC)

Stelios StylianouGeneral Manager,

EAC

Christodoulos VassiliadesAdvocate,

Managing Partner, Christodolous

G. Vassiliades & Co LLC

, ,Christodolous G. Vassiliades & Co LLC

(1988-1993)

George VassiliouFormer President of the

Republic of Cyprus

A-Z

650 IV 2011 0%

, , Andreas Neocleous & Co LLC

Andreas NeocleousAdvocate, Founder and President of the Board,

Andreas Neocleous & Co LLC

S

V V

Roman Starikovich Honorary Consul of

Kazakhstan in Cyprus

S

S

P P

S

P

OO

,-

Antis Nathanael director,

Cyprus Russian Business Association

NN

,

Yuri PianykhPresident,

Association of Russian businessmen in Cyprus

, Ernst & Young Cyprus

Neophytos Neophytou Partner, Head of Tax

Ernst & Young Cyprus

Antonis PaschalidesEx-minister of Commerce,

Industry and Tourism, Senior Lawyer,

Antonis Paschalides & Co LLC

- , , , Antonis Paschalides & Co LLC

T

Marios TsiakkisDeputy

Secretary General,CCCI


, 5 (- 2012)

Successful Business MagazineIssue 5, April-June 2012.

Editorial Board: Natalia Kardash, Andrey Korneev, Igor Nossonov, Andrey Pavelko.

Project Coordinator: Julia Basharina ([email protected])

Contributors: Daria Pisareva, Maria Vetrova, Igor Shlykov, Daria Kalenkova, Julia Avanesova, Andrianne Philippou.

Printers: CASSOULIDES MASTERPRINTERS.

Circulation: 3000 copies.

Distribution: free at business forums, conferences, seminars. 1000 selected recipients (in Cyprus and Russia) mailing list.

Subscriptions 2012 (two issues: July and October) 20 euro (delivered by courier service) or 10 euro (mailed).

Website: www.cyprusrussianbusiness.com

A note to readers: the views expressed are the authors' and not necessarily those of SUCCESSFUL BUSINESS Magazine. Authors may have consulting or other business relationships with the companies they discuss.

Copyright: no part of this publication may be reproduced or transmitted in any form or by any means without prior permission of VESTNIK KIPRA or N. G. Cyprus Advertiser Ltd.

5, - 2012

: .., . ., .., ..

: ([email protected])

: , , , , , .

: CASSOULIDES MASTERPRINTERS

: 3000

: -, , , 1000 ( ).

2012 ( : ) 20 ( ) 10 ( ).

-: www.cyprusrussianbusiness.com

: , , . .

: , , .

Vestnik Kipra Publishing House (N. G. Cyprus Advertiser Ltd)

General Manager and Editor-in-Chief: Natalia Kardash ([email protected].)

Head of Administration Dept.: Galina Panagassova ([email protected].)

Advertising Coordinator: Daria Kalenkova ([email protected].)

Accounting Dept.: Nadezda Avramidou ([email protected].)

www.cyprusadvertiser.com

Tel.: (+357) 25 590530

Fax: (+357) 25 584920

Postal Address: P.O.Box 58236, 3732, Limassol, Cyprus

(N. G. Cyprus Advertiser Ltd)

: ([email protected])

: ([email protected].)



www.vestnikkipra.com

Te.: (+357) 25 590530

: (+357) 25 584920

: P.O.Box 58236, 3732, Limassol, Cyprus

Our Team

Successful Business



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650

700

750

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850

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, 5 (- 2012)

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, 5 (- 2012)

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, 5 (- 2012)

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, 5 (- 2012)

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, 5 (- 2012)

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In the centre the organiser of the ball Tatiana Zenevitch

-

The president of the Cyprus-Russian Association of Paphos Olga Sozou is giving a present to the Minister of Communications and Works Efthymios Flourendzos

Art Exhibition

The performance of the Russian

ensemble Ladanka



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, 5 (- 2012)


PROTECTInG WEAlTH 2012

3 Protecting Wealth 2012, - EWMT Euro Wealth Management and Trustees Ltd KPMG, Glafkos Agathangelou & Assoc., FCP Insurance Consultants Ltd.

CYPRUS In InTERnATIOnAl BUSInESS PlAnnInG

9-10 , - Fiducenter. Marfin Laiki Bank. - , , , , . , , , , , , .

The participants of the conference

, KPMGPanicos Loizou, KPMG

. , EWMTSt. John Coombs, EWMT

, (CIPA) Speaker: Marios Tannousis, Cyprus Investment Promotion Agency, CIPA

(CySEC), (A.Katchies LLC), (Alathea Audit Ltd), (Fiducenter Cyprus Ltd), : (Marfin Laiki Group)Andreas Andreou (Cyprus Securities and Exchange Commission), Phivos Michaelides and Angela Katchies (A.Katchies LLC), Andreas Liasides (Alathea Audit Ltd), George Savvides (Fiducenter Cyprus Ltd), speaker: Miltos Michaelas (Marfin Laiki Group)

The participants of the onference



10 , -

. - 2002 200- ( 1802 I ). , - 10 , 1549 , .

, -, , -, , , Irina Ilipurova, Secretary, Irina Katsman, Secretary, Dmitry Garbar, 3rd Secretary, Embassy of Russia in Cyprus

, , , - Vyacheslav Shumsky, the Ambassador of Russia in Cyprus, Alexey Rogalev, Director of the Russian Cultural Center

-, , , , , Erato Kozakou-Marcoulli, Minister of Foreign Affairs, Titos Christofides, Minister under the President, Vyachelav Shumsky, the Ambassador of Russia in Cyprus

, Jae Sundaram, Dean of the Law School at the University of Buckingham

: , , Left to right: Phidias Pilides, Antonis Paschalides, Christodoulos Vassiliades

, Christodolous G. Vassiliades & Co LLCChristodoulos Vassiliades,Managing Partner of Christodoulos G. Vassiliades & Co LLC

20 - Ledra Buckingham . , , . Christodoulos G. Vassiliades & Co LLC.

, 5 (- 2012)

-

10 -. - , - () -- .

. -, - , . , - . . - , - .

, - , , - . , , .

, , , Igor Manylov, Deputy of Minister of Economic Development of the Russian Federation, Demetris Christofias, President of Cyprus

, TotalServe Management Ltd, , , Leptos GroupPeter Economides, Chairman, TotalServe Management Ltd, Pantelis Leptos, Executive Director, Leptos Group

, CIBAFrixxos Savvides, President, CIBA

, Vyacheslav Shumsky, the Ambassador of Russia in Cyprus

, Bank of CyprusYiannis Kypri, Deputy Group Chief Executive Officer, Bank of Cyprus

, CIPAChristodoulos Angastiniotis, President CIPA


, , Yuri Pianykh, President, Association of Russian businessmen in Cyprus

75


, K.P. Erotocritou & Co, , Antonis Pierides & Associates LtdDinos Erotocritou, Director, K.P. Erotocritou & Co, Antonis Pierides, Managing Partner, Antonis Pierides & Associates Ltd

: , , , Ernst & Young Cyprus; , , , Deloitte Cyprus; , , , KPMG Cyprus; , ; , ; , , ; , PWC Left to right: Neophytos Neophytou, Partner, Head of Tax, Ernst & Young Cyprus, Pieris Markou, Partner, Head of Tax Services, Deloitte Cyprus, Angelos Gregoriades, Board Member, Head of Tax,KPMG Cyprus, George Poufos, Director of the Inland Revenue Department, Phidias Pilides, President, CCCI, Dmitry Labin, Chairman, Attorney at Law, Moscow Chamber of Commerce and Industry,Vladimir Burov, Director, Tax & Legal Services, PWC Russia

, Marfin Popular BankMichalis Sarris, Chairman, Marfin Popular Bank

, PWC Cyprus, - Evgenios Evgeniou, CEO, PWC Cyprus, President, Cyprus-Russia Business Association

, Marfin Laiki Bank

, (CySec)

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, 5 (- 2012)

, , 2 ,

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Switzerlandluxembourg Cyprus

5% if 20% holding requirement AnD direct investment of CHF 200.000

5% if 10% holding requirement AnD direct investment of EUR 80.000

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Dividend WHT

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Sale of shares Property-rich companies taxed in both States with immediate effect (excludes business assets)

Sale of shares Property-rich companies taxed in both States with immediate effect

Sale of shares Property-rich companies taxed in both States BUT 4 year period exemption

Capital Gains

Applicable in All cases

Applicable in All cases

Applicable OnlY in cases where companies are not incorporated in Cyprus

limitation of Benefits

, Alpha Bank CyprusCostas Stylianou, Head of International Division, Alpha Bank Cyprus

, Fuamari Group Legal & Financial Consultants; , Karian Travel; , Martin Minasyan, Senior Partner, Fuamari Group Legal & Financial Consultants, Karina Arakelyan, Karian Travel, Serge Grigoryan, Association of Russian Banks

The participants of the Investment Forum

, ; , ; , - Phidias Pilides, President CCCI, Panayiotis Loizides, Secretary General CCCI, Georgy Petrov, Vice-President Chamber of Commerce and Industry of Russia

, , Mikhail Kuzovlev, President, Bank of Moscow, Natalia Kardash, Director, Vestnik Kipra Communication Group



16 - - , - . , -, , , , . , , - , .

The participants of the seminarRussian-speaking Community of Cyprus

- - . , . , PA Grandad Ltd, - Soulis Malecos, the director of Granddad Ltd, ex-president of the Cyprus Advertising & Communiation Agencies Association

, The presentation of Igor Nossonov,President of the Association of Russian-speaking residents of Cyprus Gorizont

, The presentation of Counsellor Yan Orlovsky, the Embassy of Ukraine

, . - , - , Gnora Communication ConsultantsVeronica Nicolaou and George Constantinou, Gnora Communication Consultants

- . . , PA Ecastica AdvertisingElisa Solea, the director of the company PA Ecastica Advertising

The participants of the seminarRussian-speaking Community of Cyprus

, , - Fashion TV RussiaThe presentation of Ekaterina Melas, Consultant, Ex-president, Fashion TV Russia

. , - . , PA Pandora/Ogilvy & MatherElias Arvanites, the director of PA Pandora/Ogilvy & Mather


, 5 (- 2012)

fUTURE Of EUROPE16 ,

The Economist. . Debating on Europe's Future. What lies ahead for the Eurozone? . .

, CIPA

0

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The participants of the Conference

ECB SMPEU/IMF bailout

: , 60-70% ,

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AlPARI1 Alpari ( -, - ). , VIP- , , . , .

, Alpari, CyprusGaies Chreis and Olga Rybalkina, CEO of Alpari, Cyprus

, Piraeus Bank, , Symeon Simeou, Piraeus Bank, Diomedia Hadjiona, Koulia Aggelidou

, Deloitte, , IMH, , GoldNicos Kyriakides, Deloitte, George Michael, IMH, John Vickers, Gold Magazine

, H.E. Ambassador of Russia in Cyprus Vyacheslav Shumsky

, AlpariYulia and Andrey Dashin, founder, Alpari

Stelios and Toulla Constandinou

John Lewis and Kate Kuzenetsova

, - Phidias and Despo Pilides, CCCI

, Alpari, , Olga Rybalkina, Alpari, Kirill Kuchinskiy, Maxim Chadin, Promsvyazbank

The performance by greek singer Anna Vissi


, 5 (- 2012)

- CYPRUS-RUSSIA BUSInESS ASSOCIATIOn

10 Coral Beach () - -, - Leptos. , - , .

, - Andis and Gianoula Nathanael, Cyprus-Russian Business Association

, Savvas Vergas, Mayor of Paphos

,

Rodion and Maria Kotchetkov, Association of Russian Businessmen in Cyprus

(N.B. Jewellery Ltd)Neophytos and Peggy Neophytou (N.B. Jewellery Ltd)

, KPMG, , , , K.P. Erotokritou & CoPanicos Loizou, KPMG, Natalia Kardash, Vestnik Kipra, Dinos Erotokritou, K.P. Erotokritou & Co

,

., ,

,

Bishop of Paphos, Abbot of St. Neophytos Monastery,

Phidias Sarikas and Costakis Constantinou, members of the

Parliament

, Harris and Agapi Thrassou, Cyprus Electricity Authority

, Leptos, Sakis Hadjialexandrou, Leptos Group, H.E. Ambassador of Russia in Cyprus Vyacheslav Shumsky

, Leptos

George and Tina Leptos, Leptos Group



15 Four Seasons - University of Houston, Energy Tribune . , . , , . 87% 13%, - . , 10, 20 . , , , 300 , .

, - , - . - IPO, 70% , 30% , , . , , 10 .

(CIBA) Deloitte.

(N.B. Jewellery Ltd)Neophytos and Peggy Neophytou (N.B. Jewellery Ltd)

, Deloitte CyprusChristis Christoforou,Director, Deloitte Cyprus

, University of Houston, Professor Michalis Economides, University of Houston, USA

, (CIBA)Frixxos Savvides, President, CIBA

2035 .

.

11,3%

Wind

: , 400

The participants of the meeting


, 5 (- 2012)

9th Retail Conference: 4 : Hilton Hotel, : IMH :: +357 22 505555email: [email protected]

6th Administration Conference

: 6 : Hilton Park Hotel, : IMH :: +357 22 505555email: [email protected]

Latest Trends In International

Investment Products : 23 : KPMG Offices, : KPMG Limited, University of Nicosia and Intercollege :: +357 22 209 053: +357 22 513 294email: [email protected]

Stock Exchange Conference

: 27 : Hilton Hotel, : IMH :: +357 22 505555email: [email protected]

9th Property Exhibition: 27-29 : ExpoCyprus, : IMH :: +357 22 505555email: [email protected]

, . www.cyprusrussianbusiness.com. , -.

, - 2012

Investment Funds And Investment

Fund Management: 10-11 : KPMG Offices, : KPMG Limited ::+357 22 209 053: +357 22 513 294email: [email protected]

A Global Approach To Trusts And Their

Tax Implications: 11 : Intercollege, : KPMG Limited, University of Nicosia and Intercollege ::+357 22 209 053: +357 22 513 294email: [email protected]

Accounting For Financial Instruments

: 14-15 : KPMG Offices, : KPMG Limited ::+357 22 209 053: +357 22 513 294email: [email protected]

3rd ICT Summit



2012. . . . : 25 . (70-100 ): -, , , 17 , - , , , , , . . , , .

2012. . . -: : 35-50 . (200-280 ): , - , 24 , , - , , , , , , , . 100 , , - . , , , 50 .

, , . .

,

: .. 25 590 530 ( [email protected] [email protected])

:

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22 16.45. - . .24 , , , . - , , , . 24 .

25 I - - . 100 , , . - , . - , .

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, , .1. (). , , , --, . - 500 . 2. . , , , --, :- ( ) , - ( : - , ). 1000 .3. . - : , , , - , , . - . - - . ( , , , , , , ) . - .


, 5 (- 2012)

3rd Pension Funds Conference

: 30 :Hilton Park Hotel, : IMH :: +357 22 505555email: [email protected]

IFRS Updates And Advanced

Applications: 11 : KPMG Offices, : KPMG Limited ::+357 22 209 053: +357 22 513 294email: [email protected]

Law Forum

: 22 : Hilton Hotel, : IMH :: +357 22 505555email:[email protected]

5th CSR Conference


Nicosia Economic Congress


Advanced Vat Seminar

: 25 : KPMG Offices, : KPMG Limited ::+357 22 209 053: +357 22 513 294email: [email protected]

10th Communication Conference


Introduction To Strategic Planning

And Financial Forecasting: 28 : KPMG Offices, : KPMG Limited ::+357 22 209 053: +357 22 513 294email: [email protected]


, 5 (- 2012)



This section of the magazine contains a summary of the most important articles. We have translated them into English for those of our clients and partners who do not speak Russian but want to know more on the content of this issue. This issues spotlight is the energy sector of Cyprus. We have a lot of information on energy projects, articles on natural gas exploration, its influence on public finance, banks, investment activity. Of course we have compiled statistical data; we have even made our own calculations and estimates on the impact gas finds have already had and will continue to have, on the future of the Cyprus economy.

There is a list of upcoming events and a detailed program of those events where SUCCESSFUL BUSINESS or VESTNIK KIPRA are Media Partners. By the way, any of our clients may announce their business events in our forthcoming issues, inviting our readers to their presentations and parties. We are very active in the social life of our community. Our correspondents visit many different events in order to publish reportages. Photos and videos are also placed on our website (www.cyprusrussianbusiness.com).

This is the only business magazine in the Russian language published in Cyprus. It comes out quarterly. In order to keep our readers informed we update our website every day with the most important business news, statistics, analysis, stock exchange results, all kinds of monetary questions and financial market issues. A list of names (people, companies, events) published in the issue will be always placed on the last pages of the magazine. This way anyone can easily trace necessary information.

Please look through summaries provided in this section of the magazine. And if you have questions or you need more information, please do not hesitate to contact us for further details.

Natalia KardashPublisher

[email protected]

EducatIOn and carEErs

Higher and professional education in Cyprus, professional development and advanced training, recruiting, head hunting, business psychology. Detailed programs of trainings, seminars, conferences, business forums in Cyprus and abroad.

FInancE and InvEstmEnts

Articles on Cyprus banking, insurance, taxation, brokerage and investment fields. World tendencies in finance markets, reports and analysis on oil, gold and currency markets. Insurance, investment in business and property (comparative analysis, statistics, price movement).

Law and taxatIOn

Comments and interpretations on taxation, auditing and accounting. Corporate law. Labour law. Immigration and migration issues.

LIFEstyLE

Independent rating of Cyprus' restaurants, hotels, recreational facilities for business people. Columns on wine, style, business fashion, cars.

TABlE Of COnTEnTS

VESTnIk kIPRA COMMUnICATIOn GROUPVESTNIK KIPRA is a group of companies working with the Russian community of Cyprus. The most important fields of activities are publishing, education, event management, PR and the promotion of Cypriot enterprises in Russia and Ukraine. Well known publications: weekly Russian newspaper VESTNIK KIPRA, MAGAZINI KIPRA (Cyprus Shopping Guide), DOMA i LUDI (Cyprus Property Guide), Russian Yellow Pages. The biggest events: Cyprus-Russian Festival, Limassol International Children's Festival. NGO: Association of Russian-speaking residents of Cyprus.

Executive Summaries

Every work is evaluated based on the results

Cyprus The natural Gas Opportunities

Exploitation of Hydrocarbon Resources in Cyprus

Cyprus Gas find Boosts Countrys Energy Hopes

Strategic Development Options for Cyprus Oil and Gas Development

Cyprus Energy: Comments of Experts

The History of Oil and Gas Exploration in Cyprus

Gasification of Cyprus

Urgent reforms

Stelios Stylianou: Chief Power Engineer of Cyprus

BusInEss and tEchnOLOgIEs

News on IT, e-commerce, e-money. New business technologies, innovations. Advertising, PR, business communications.

Practical information on Cyprus and CIS economies, business tendencies, reports and analyses on world economy and its influence on business.

BusInEss and EcOnOmy


, 5 (- 2012)

Cyprus Investment Promotion Agency (CIPA) was created four years ago to make investments, to help foreign investors to choose projects and receive all necessary information.CIPA supports investors in all aspects associated with the successful conduct of business in Cyprus. Who are the CIPAs Board of Directors? How are Board Members selected? How is the work of CIPA evaluated? The Board of Directors includes 15 members who are personally selected by the Minister of Commerce, Industry and Tourism. The Agencys work is evaluated by statistical data. While the amount of foreign investments being made in the Cypriot economy is growing the work of CIPA can be considered as satisfactory. What are the most significant investment projects?The main sector of the economy remains the financial services sector. However, large projects are being implemented in many sectors of the economy: the construction of entertainment centers, centers for medical tourism, golf resorts, and the construction of marinas. These projects will provide new jobs for the population. What do you believe is of greatest appeal for the Russian market?Russian entrepreneurs are interested primarily in the financial services sector. In this regard, Cyprus considers Russia as a major business partner. As President of CIPA, what are your main aims?My main goal is to make a feasible contribution to the Cypriot economy, to help Cyprus to overcome the crisis as soon as possible.

Every work is evaluated based on the results

Interview with Christodoulos Angastiniotis, the President of CIPA, Vice-president of the CCCI

Invitation to tender for the 12 gas fieldsThe Cyprus Government on 11 February 2012 opened officially the second licensing round for offshore hydrocarbon exploration by advertisements in the Official Journal of the European Union, as well as the Official Gazette of the Republic of Cyprus. The tenders will be for 12 out of the 13 blocks in the Exclusive Economic Zone of Cyprus. Applications by interested parties should be submitted to the Minister of Commerce, Industry and Tourism within 90 days of the publication of the invitation, ie by 11 May 2012. The criteria which will be used to evaluate the proposals and grant the licences are:(a) the technical and financial ability of the applicants(b) the ways in which the applicant intends to carry out the activities that are specified in the licence(c) the financial consideration that the applicant is offering in order to obtain the licence (d) any lack of efficiency and responsibility that the applicant has shown under any previous licence or authorisation of any form in any other country of the world.Issues of national security will also be taken into consideration.The initial exploration period for assessing whether and to what quantities natural gas reserves are available, is for three years, with the option to renew the licence for two additional two year periods.The terms and the mode operation of the exploration will be governed by the terms of an Exploration and Production Sharing Contract. It has been announced that more than 60 interested parties have paid and acquired the seismic data and surveys.

Cyprus The natural Gas Opportunities

Neophytos Neophytou,Head of Tax Services, Ernst & Young Cyprus

Geostrategic and financial interests regarding gas exploration and exploitationBased on EU reports, the Republic of Cyprus is classified as an emergent market for natural gas and also as an isolated market. Unlike the electricity sector, which has already been liberalised, the gas sector according to the last amendment of the law regulating the natural gas market, as well as the relevant decisions of the Council of Ministers, shall be fully monopolistic for a minimal period of 20 years. DEFA, the Natural Gas Public Company, which is controlled by the State, has been appointed by the Cyprus Government, as the sole importer and distributor of any form of natural gas in Cyprus. Regarding the Gas/LNG markets in Europe and the Eastern Mediterranean Region, natural gas increased its share in the global energy mix over the last 40 years, whereas according to the latest International Energy Agency (IEA) analysis, the outlook for gas for the next 30 years is positive with the prospect of an even bigger share in the overall energy mix. legal regulatory framework The importance should be turned to the alignment of Cyprus Energy Policy with EU policy and legislation and is based on three main areas: security of supply, economic efficiency and environmental strategy. The security of supply reflects the EUs ambition for diversification of energy sources and parallel maintenance of natural security stocks. The next step is that economic efficiency is connected with the decrease of the cost of energy and the cost of production. On the other hand, environmental strategy targets the EUs objectives regarding the contribution by renewable energy sources to 13% by 2020, in the reduction of CO2 emissions and the improvement of power generation efficiency.

Exploitation of Hydrocarbon Resources in CyprusChristos Floridis, Advocate, Senior Associate, Head of European Affairs Department, Andreas Neocleous & Co LLc

EXECUTIVE SUMMARIES



Antonis Paschalides: The fact that Cyprus is in the vicinity of the main international energy routes and the busy air and sea routes, together with the recent discovery of natural gas in its EEZ (Exclusive Economic Zone), have put the Republic of Cyprus on the world energy map.Part of the EEZ of the Republic of Cyprus located south of the island, and covering an area of around 51,000 square kilometres, was divided into 13 Exploration Blocks introduced to an offshore hydrocarbon exploration programme.The First Round of Licensing involving only plot 12, concluded with an agreement with US company Noble Energy on the 24th October 2008 for the rights of exploration, which was followed at the end of 2011 by an official announcement of very positive findings estimated around 8 tcf (trillion cubic feet) worth around US$100 billion.Naturally the findings of plot 12 have not only given great hope for the future of Cyprus economy but have increased interest for the remaining plots which will be included in the Second Round of Licensing. A new role for Cyprus as an energy hub in the Mediterranean Region would promote the Republic to a key geopolitical and geostrategic player, offering opportunities for new supply routes to Europe through either LNG transport or pipeline transport, creating synergies with huge potential for the economy of Cyprus and its trading partners, which in turn will form new alliances with neighbouring countries.Marios Tsiakkis: There is no doubt that the discovery of considerable hydrocarbon deposits in block 12 of the Exclusive Economic Zone of Cyprus and the on going process for the licensing of additional blocks, will create tremendous investment opportunities in Cyprus over the next decades. Starting with the need to set up the necessary offshore exploration facilities, building and positioning the pipelines for carrying the natural gas on-shore for further processing and the building of the appropriate facilities for its liquefaction, either for domestic use or for export purposes, shows the magnitude of investments both in financial and technical terms.The need to build all the necessary infrastructure in Cyprus will definitely take many years to be completed and once these are commissioned they will be in operation for many decades. This by itself denotes that there will be substantial employment and business opportunities in the country in almost every sector of economic activity.


Antonis Paschalides, Senior Lawyer, Antonis Paschalides & Co LLC, Marios Tsiakkis, Deputy Secretary General, CCCI

Executive Summaries

In my first article for 2012 I will try to examine the possible impact the discovery of natural gas in the exclusive economic zone (EEZ) of Cyprus will have on Cyprus economic life under todays economic realities (crisis).How is this going to affect a) the Cypriot economy; b) the future of Cyprus?The excessive debts of households and businesses are one of the major imbalances of the Cypriot Economy.A large part of the problem has to do with excessive borrowing in the private sector.It was an auspicious end to a traumatic year for Cyprus (2011), which was hammered by rating agencies for fiscal slippage, shut out of international capital markets and hit by a large munitions blast that destroyed its largest power station. Prospect of offshore gas lifts Cypriot economic spiritsIn the next two to five years the benefits and exploration of the Cypriot gas-field could bring enormous benefits if handled strategically and efficiently. In my personal opinion there are several options worth exploring:1. Cypriot Nobel Prize winner, Christoforos Pissarides stated that Cypriot Banks will be supported by foreign investors and not the Government.2. The Central Bank of Cyprus should encourage mergers between some of the banks and streaming (cost cutting) of their local and foreign operations. 3. There should be a consensus of creating one Cooperative Bank (unifying all 100 independent small cooperatives) and therefore adding transparency to the cooperative movement in addition to better administration and more efficiency and credibility (currently the Cooperative control over 30% of local deposits).

Cyprus Gas find Boosts Countrys Energy Hopes

Costas Stylianou,Head of International Division Alpha Bank Cyprus

There are several strategic issues involved in hydrocarbon exploration and exploitation in Cyprus. The political issue vis--vis Turkey is an obvious one. Yet a more important one is the commercialisation strategy Cyprus will follow to valorise its natural gas resources. The investment costs of this strategy will be a key factor in determining the economic reserve estimate of hydrocarbons, together with the success with which Cyprus can attract foreign investors to develop these resources. Resources, Reserves and Economic ValueEstimating the exact value of Cyprus hydrocarbon reserves is difficult. On the one hand, the exploration has not been fully completed. On the other hand, the classification of gas from the resource category to the reserve category is dependent on a wide range of factors, starting from international gas prices to the estimated costs of extraction. Three Strategic Options for Developmenta. Domestic consumption, replacing imported oil and gasb. Export to markets by pipelinec. Export to markets in liquefied form. In addition, there are certain minimum investments which must be made for large-scale exploitation. The investments required for each of these options are significant, though not prohibitive.Problems with Renewable EnergyOne of the potentially unwelcome impacts of domestic electricity generation from natural gas will be to highlight the price differential between gas-fired electricity and renewable energy sources. Given that natural gas will become the predominant generation feedstock, its clear that the renewable energy FIT will be subsidised by natural gas, at least as far as AHK is concerned. This is a potentially dangerous situation which requires a careful balance of policy priorities.

Strategic Development Options for Cyprus Oil and Gas Development

Philip Ammerman, Consultant, Managing Partner, Navigator Consulting Group Ltd.


, 5 (- 2012)

Antonis Charitou: News that results of the exploration of gas reserves in area 12 of the exclusive economic zone of Cyprus reach between 160-255 billion m3, has received a positive response from the entire population of the island.The estimation of the economic benefits from the development of this field have been given by several sources. According to preliminary calculations, the cost of the gas field is about 100 billion U.S. dollars.With the discovery of deposits in area 12 there is an opportunity for additional research of other parts in the Exclusive Economic Zone of Cyprus. Thus, the importance of Cyprus has increased even more on the energy map of the region.Necessary infrastructure meets the needs for housing, leisure and job creation.George Demetriou: The discovery of gas fields in Cyprus opens up new directions in economic development. In November 2011, the Cabinet of the Ministers of the Republic of Cyprus decided to start the second round of issuing licenses for exploratory drilling, in areas of the exclusive economic zone of Cyprus.Last summer the Committee of Energy sector was established at the CCCI. The Committee conducts a preliminary assessment of the economic and social benefits of natural gas production in Cyprus, both for local and international companies, as well as different fields: science, transportation, supplies, etc.nikiforos Pampakas: The new findings have come to provide a much needed silver lining in a period of global instability and could alter the future dynamic of the economy. The discovery of the natural gas reserves has been one of the biggest in past few years, already attracting a vast amount of interest from some major multinational energy companies. It has also given way to talks surrounding the development of the reserves, something equally as vital in raising awareness around Cyprus and its future prospects. Cyprus could become a sizable net exporter of energy - it can only have a positive effect on our economy. I am confident that it will continue to improve sentiment and that its impact will start to manifest itself across a broad spectrum of businesses, by creating new jobs and a subsequent demand for high end properties in the real estate sector.

nicos Papakyriacou: The potential impact of the hydrocarbon discoveries on the future of Cyprus can be extremely significant both on the Socioeconomic front as well as the Geopolitical front.In addition to the obvious stream of revenues from the future export of our gas reserves, the emergence of this new industry and the possible direct foreign investment in significant infrastructure projects such as the Liquefaction plant and the pipeline facilities will create the need for a great number of other support services. All these will lead to the creation of thousands of jobs, will help the ailing property market and will have a favourable domino effect on many sectors of the economy such as the financial and professional services and many others. Constantinos Taliotis: Gas fields are of great importance, both for Cyprus and the EU. In this area, Russia has a great impact and has considerable support. For example, 80% of fuel and 70% of gas are exported from Russia to Europe. And then the EU re-exports 35-36% of Russian gas and about 30% of the fuel.In the near future Cyprus will begin to produce natural gas. This is crucial for the Cyprus economy, and gives great geopolitical advantage. Cyprus will be the energy center in the Mediterranean and the largest exporter of natural gas. The project will involve about 250 companies in gas production from different sectors of the economy. Two universities of Cyprus are considering the possibility of creating a new department (initially in the format of a course) to study the oil industry. I believe that the role of Cyprus is to promote cooperation between the EU and Russia, to strengthen ties between them.nicolas Theocharides: Cyprus first gas find could not have happened at a better time. The global financial crisis and the ensuing recession have unfortunately taken their toll on Cyprus too. Although the anticipated revenues from the eventual exploration and extraction of gas and also possibly oil, seems at the time to still be at best four to five years down the road, the required investments that will make the extraction possible, as well as all the investments required in all kinds of ancillary industries to the oil and gas extraction will start in the next couple of months. Forward looking investors can realize that at this time, Cyprus is offering unique opportunities for investments in several sectors of the economy.



I first came to Cyprus in April 1981, to join the group of experts that implemented Project CYP/77/009 under the auspices of the UN. The project was directed at developing energy supply and energy-saving. An element of the project was the evaluation of petroleum potential of the island, and I was the executor of this line. The results of hydrographic surveys, seismic surveys and drilling, which took place in the Mediterranean basin, dated 1980, were presented in the report, which received high priority by the Government of Cyprus. However, it took 25 years to ensure that our recommendations were implemented.Before my arrival there were numerous geological explorations in the Mediterranean Sea. The list of research participants includes the Soviet vessel Yuri Godin, Akademik Archangel and Akademik Strakhov worked in the Eastern Mediterranean. In addition, the representatives from Italy, Britain, France, Israel, and the U.S. did a very large amount of work here that was not directly focused on oil exploration.In 1980, after the visit of the company Standard Oil of Indiana (SOHIO) to Cyprus, the government of Cyprus was considering the exploration on the continental shelf to the south of the island.I think today the most pressing issue is the future management of the oil economy of the Republic of Cyprus. Cyprus has to declare itself as a potential supplier of LNG to Europe and apply for membership in the international gas cartel.The development of gas fields is the process extended in time of the development and exploitation of oil fields, and it will take at least 15 years before Cyprus will receive any real income from the export of natural gas.

The History of Oil and Gas Exploration in Cyprus

Yuri Pashkov, Ph.D. in Geology and Mineralogy, former Counselor to the UN in Cyprus

Antonis Charitou, Head Of International Department, Hellenic Bank, George Demetriou, Vice-President, Limassol Chamber Of Commerce And Industry,Nikiforos Pampakas, Limassol Marina's Marketing Manager

Nicos Papakyriacou, Partner in Charge, Deloitte Cyprus, Constantinos Taliotis, Responsible Partner of PwC Cyprus, Nicolas Theocharides, CEO and Managing Director of The Financial Services Company U.P.M. Ltd

EXECUTIVE SUMMARIES



- When was DEfA established? What is the purpose of it? What did the company do before the discovery of natural gas reserves in Cyprus?DEFA is a state enterprise, founded three years ago. The Cypriot Government owns 100% of the company. DEFA was established to import natural gas and it is the only importer and distributor of natural gas in Cyprus. In this context, we make every effort to import gas efficiently, and moreover, we plan to create a gas distribution network. The government has given DEFA the exclusive right to import gas for the next 20 years. This coincided with a statement of the availability of natural gas reserves in the Exclusive Economic Zone of Cyprus. Now the function of the company is to import gas for the next five years, until we begin direct production from our own deposits. At the same time we are in the final planning stage of a gas distribution network, the map of the gas distribution network in Cyprus: Phase 1. Initially, natural gas will be supplied to Vasilikos power station. - How long will construction of the distribution network (pipelines) be for Phase 1?- About 3 years.- Why did you decide to supply gas plants in the first place?- For two main reasons: 1. To reduce the cost of electricity;2. To reduce the emissions of carbon dioxide in the atmosphere.- What are the building expenses of the new infrastructure? Will the cost of electricity generated from natural gas be cheaper?- Absolutely. Infrastructure costs will be compensated in 30-40 years. Phase 2 involves the construction of gas distribution networks that will ensure the needs of key sectors, including the hotel business. Phase 3 involves the gasification of houses.

Gasification of Cyprus

The energy sector of Cyprus is going through hard times it does not have its own power supply; the cost of electricity is breaking all records in Europe. However, the root cause of the problem is not an explosion in Mari. Its roots go back to 1966 when the first two turbines were launched at the power station in Moni.They were steam generators operating on diesel fuel. Frankly speaking, no error was committed. The Power station in Moni is the second station of Cyprus (the first was in Dhekelia). It was built under the cheapest fuel in those days. But times are changing. The problems of EAC and the whole energy sector of the island is that while the world develops, Cyprus continue

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