Cyprus to auction gas blocks with Italy-SKorea venture

Cyprus entered talks Thursday with Italian-South Korean venture ENI-KOGAS on licensing two offshore exploration blocks, state media said, as the recession-hit island steps up its search for gas reserves.

The cabinet reportedly gave the green light for the negotiations on blocks 5 and 6 to begin, with a December 2 deadline ready to be extended.

Government spokesman Victoras Papadopoulos confirmed ministers had discussed the issue but told reporters there was "nothing to announce publicly".

Earlier this year, ENI-KOGAS secured permits to exploit possible hydrocarbon deposits in blocks 2, 3 and 9.

The venture plans to start drilling in the third quarter of 2014, while France's Total will exploit blocks 10 and 11 from 2015. Total is also looking for oil, not just natural gas.

Cyprus, which is treading a painful road to recovery from near economic meltdown earlier this year, is hoping to commercially export its gas, and maybe oil, by 2020.

Securing deals for blocks 5 and 6 would complete a second round of licensing and pave the way for a third to auction off the remaining blocks.

The government is also going ahead with the building of a liquefied natural gas plant for its offshore gas, as there are other blocks to be exploited.

In March, Cyprus agreed a painful 10-billion-euro ($13.3-billion) rescue package negotiated with the European Commission, European Central Bank and International Monetary Fund to bail out its troubled economy and oversized banking system.