Despite the economic woes which cast upon Cyprus the haircut on deposits, also known as ‘bail-in’, the Cypriot economy has demonstrated remarkable resilience. The scheduled drilling programme for hydrocarbons in blocks 2, 3, 9, 10 and 11― beginning in late 2014 ―could well nudge the economy out of the slump.
Until then, there are constructive things that could be done to spur growth and contain the scourge of unemployment. Within three years from signing the contracts with the Republic of Cyprus, in early 2013, companies are scheduled to spud at least five exploratory wells. If we add to this another three appraisal wells, it is expected that about eight offshore wells in all will be completed.
Given that the cost per offshore well comes to $100m― a conservative calculation ― the value of investments that will be channelled into Cyprus is expected to reach $800m. But the real question is what proportion of these investments will diffuse into the real economy? Put differently, how can Cyprus best take advantage of this juncture through job creation? Read more