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THE MARKET POTENTIAL OF CYPRUS
BUSINESS OPPORTUNITIES FOR AUSTRIAN COMPANIES
Dr. GERD DÜCKELMANN-DUBLANY
FORUM BUSINESS OPPORTUNITIES IN CYPRUS
Vienna, 05.06.2019
ECONOMIC OVERVIEW
• Impressive turnaround since 2015
• GDP growth 2018: +3,9 %
• Recovery on a broad basis: Construction, tourism, private consumption
• Approx. 4 million tourists in 2018 (+7,8 %) – all-time record!
• April 2019: +4,8 % - highest volume ever recorded
• Contribution of Tourism to GDP at 13 %
• 3 Imbalances: Public Debt, Private Debt, NPLs
• Austrian exports of goods 2018 +9 %
The market potential of Cyprus
2
ECONOMIC PERFORMANCE
The market potential of Cyprus
GDP at current prices and exchange rates1 Real GDP Growth1
(in mil. EUR) (in mil. EUR)
3
19.490
18.14017.610 17.746
18.490
19.64920.731
21.618
0
5.000
10.000
15.000
20.000
25.000
2012 2013 2014 2015 2016 2017 2018 2019*
-1,3
2,0
4,84,5
3,9
3,1
2,7
-2
-1
0
1
2
3
4
5
6
2014 2015 2016 2017 2018 2019* 2020*
* Forecasts
Source: EU-Commission, OECD 1 according to ESA 2010
Update: May 2019
DEVELOPMENT OF FOREIGN TRADE
The market potential of Cyprus
Imports of goods Exports of goods
Unit: in bn. EUR Unit: in bn. EUR
4Source: Cystat, 2018
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
10,0
2016 2017 2018
7,1
8,2
9,1
4,7 4,9 5,2
Total Imports Imports from EU
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
10,0
2016 2017 2018
2,7 3,0
4,2
1,3 1,1 1,2
Total Exports Exports to EU
TOP HS/CN POSITIONS
The market potential of Cyprus
5Unit: in mil. EUR
Source: Eurostat, 2018
142,9
166,4
175,6
188,2
237,3
395,5
443,7
624,5
1.902,3
1.934,2
0 200 400 600 800 1.000 1.200 1.400 1.600 1.800 2.000
72 IRON AND STEEL
22 BEVERAGES, SPIRITS AND VINEGAR
73 ARTICLES OF IRON OR STEEL
39 PLASTICS AND ARTICLES THEREOF
30 PHARMACEUTICAL PRODUCTS
85 ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS,…
84 NUCLEAR REACTORS, BOILERS, MACHINERY AND MECHANICAL APPLIANCES; PARTS THEREOF
87 VEHICLES OTHER THAN RAILWAY OR TRAMWAY ROLLING-STOCK, AND PARTS AND ACCESSORIES THEREOF
27 MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION; BITUMINOUS SUBSTANCES;…
89 SHIPS, BOATS AND FLOATING STRUCTURES
48,1
55,9
117,2
142,3
146,9
204,1
248,0
300,1
1.013,5
1.459,6
0 200 400 600 800 1.000 1.200 1.400 1.600 1.800 2.000
29 ORGANIC CHEMICALS
99 OTHER PRODUCTS
84 NUCLEAR REACTORS, BOILERS, MACHINERY AND MECHANICAL APPLIANCES; PARTS THEREOF
88 AIRCRAFT, SPACECRAFT, AND PARTS THEREOF
73 ARTICLES OF IRON OR STEEL
04 DAIRY PRODUCE; BIRDS' EGGS; NATURAL HONEY; EDIBLE PRODUCTS OF ANIMAL ORIGIN, NOT…
85 ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THEREOF; SOUND RECORDERS AND…
30 PHARMACEUTICAL PRODUCTS
27 MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION; BITUMINOUS SUBSTANCES;…
89 SHIPS, BOATS AND FLOATING STRUCTURES
Imports of goods
Exports of goods
BILATERAL TRADE OF GOODS WITH AUSTRIA
The market potential of Cyprus
6
Source: Foreign Trade Statistic, Statistik Austria; *preliminary values
Unit: in mil. EUR
11,4 8,2 5,4 7,2 5,2 4,3 8,1 5,1 4,79,4
13,68,5 11,5
29,2
11,0
21,6 22,916,2 15,0 17,6 17,4 20,1 19,7 18,515,0 15,2 18,2
28,5 28,838,0 36,9
105,0
48,139,9
45,750,9
62,6
76,1
65,8 66,874,8
91,8
111,5
73,5
48,253,2
67,673,7
- 30,0
20,0
70,0
120,0
170,0
220,0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Exports of Goods to Austria Exports of Goods to Austria excl. HS/CN 89 - Ships, Boats and floating Structures
Imports of Goods from Austria Imports of Goods from Austria excl. HS/CN 89 - Ships, Boats and floating Structures
TOP IMPORT POSITIONS FROM AUSTRIA
The market potential of Cyprus
7
17,785 ELECTRICAL MACHINERY
AND EQUIPMENT AND PARTS
THEREOF…
15,184 NUCLEAR REACTORS,
BOILERS, MACHINERY AND
MECHANICAL APPLIANCES;
PARTS THEREOF
4,487 VEHICLES
OTHER THAN
RAILWAY OR
TRAMWAY
ROLLING-STOCK,
AND PARTS AND
ACCESSORIES
THEREOF
4,061 ARTICLES OF
APPAREL AND
CLOTHING
ACCESSORIES,
KNITTED OR
CROCHETED
3,439 PLASTICS AND
ARTICLES
THEREOF
3,122 BEVERAGES,
SPIRITS AND
VINEGAR
2,895 TOYS, GAMES AND
SPORTS REQUISITES;
PARTS AND
ACCESSORIES
THEREOF
2,690 OPTICAL,
PHOTOGRAPHIC,
CINEMATOGRAPHIC,
MEASURING,
CHECKING,
PRECISION, MEDICAL
OR SURGICAL
INSTRUMENTS AND
APPARATUS; PARTS
AND ACCESSORIES
THEREOF
2,548 PAPER AND
PAPERBOARD;
ARTICLES OF
PAPER PULP, OF
PAPER OR OF
PAPERBOARD
2,104 DAIRY PRODUCE;
BIRDS' EGGS;
NATURAL HONEY;
EDIBLE PRODUCTS
OF ANIMAL ORIGIN,
NOT ELSEWHERE
SPECIFIED OR
INCLUDED
Source: Foreign Trade Statistic, Statistik Austria, 2018
Unit: in mil. EUR
TOP EXPORT POSITIONS TO AUSTRIA
The market potential of Cyprus
8
7,404 DAIRY PRODUCE;
BIRDS' EGGS;
NATURAL HONEY;
EDIBLE PRODUCTS
OF ANIMAL ORIGIN,
NOT ELSEWHERE
SPECIFIED OR
INCLUDED
2,822 BEVERAGES,
SPIRITS AND
VINEGAR 1,630
PHARMACEUTICAL
PRODUCTS
1,108 EDIBLE FRUIT
AND NUTS; PEEL
OF CITRUS FRUITS
OR MELONS
0,894 FURNITURE;
BEDDING,
MATTRESSES…
0,715 ANIMAL OR
VEGETABLE FATS
AND OILS…
0,685 ELECTRICAL
MACHINERY AND
EQUIPMENT AND
PARTS THEREOF…
0,332 TANNING OR
DYEING
EXTRACTS…
PAINTS AND
VARNISHES…INKS
0,207 EDIBLE
VEGETABLES AND
CERTAIN ROOTS
AND TUBERS
1,987 VEHICLES
OTHER THAN
RAILWAY OR
TRAMWAY
ROLLING-STOCK,
AND PARTS AND
ACCESSORIES
THEREOF
Source: Foreign Trade Statistic, Statistik Austria, 2018
Unit: in mil. EUR
BILATERAL TRADE OF SERVICES WITH AUSTRIA
The market potential of Cyprus
9Unit: in mil. EURSource: ÖNB
155 152
176
151
136
160
0
20
40
60
80
100
120
140
160
180
200
2016 2017 2018
Exports of Services to Austria Imports of Services from Austria
BILATERAL DIRECT INVESTMENTS
The market potential of Cyprus
10Unit: in bn. EURSource: ÖNB
2,8 2,8
2,72,6
2,5
1,6
2,3 2,32,2
1,0
0,8
1,0
1,6
1,8
1,6
1,41,5
1,3
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Austrian FDI stock in Cyprus Cypriot FDI stock in Austria
BUSINESS OPPORTUNITIES FOR AUSTRIAN COMPANIES
• Tourism & Leisure infrastructure and supplies
• Business services
• Energy hub: Oil & Gas exploration and transport
• Construction, renovation of residential, administration and office buildings
(e.g. new parliament)
• Road construction, redevelopment, improvements
• Railway infrastructure (tramline in Nicosia?)
• Renewable energy sources
• Environmental technology (waste/water treatment)
• Franchise concepts (retail)
• Smart/EcoCity projects
• Medical tourism facilities
• Recruitment of human capital in STEM
• Never give up: Cyprus United?!
The market potential of Cyprus
11
© 2019 - GoldNews.com.cy
• Up to 227 billion cubic meters
• Expected worth at 30-40 billion euros
• Drilling by ExxonMobil in Block 10 of the EEZ
• Turkey immediately filed claims
12
The market potential of Cyprus
GAME CHANGER GAS DISCOVERY?
Block10
• 2011 - Discovery of Aphrodite gasfield• by Noble Energy, Royal Dutch Shell and Delek Drilling
• Estimated reserves: 3.6 to 6 tcf
• Production expected to begin 2024/25
• 2015 - Discovery of Zohr gasfield• Off the shore of Egypt by ENI
• Largest gas discovery ever made in the Mediterranean
• with reserves of 30 tcf
• December 2017 – Beginning of production at Zohr• Helped Egypt to recover its self-sufficiency
• New phase of exploration in Egypt’s offshore waters
• leading to further discoveries
• Egypt now produces a record 6.3 billion cubic feet ofgas a day - up by more than 30 percent since 2016
• making it one of the biggest producers in North Africaand the Middle East
• February 2019 - ExonMobil announcement• Substantial gas discovery in offshore Cyprus Block 10
• Double the country´s estimated offshore resources 13
The market potential of Cyprus
ENERGY HUB CYPRUS
© 2017, CYPRUS HYDROCARBONS COMPANY
Zohr
Offsh
ore
Gas D
iscoverie
s
SUBSEA PIPELINE BETWEEN CYPRUS AND EGYPT vsVASILIKOS LNG TERMINAL
• in September 2018 Cairo and Nicosia signed an agreement to build a direct subsea pipeline • for the export of gas from the Aphrodite gas field to LNG plants in Edku or Damietta in Egypt
• and its re-export to various markets• the only two large-scale gas export terminals in the eastern Mediterranean
• Capacity of 19bn cubic meters a year
• Part owned by Royal Dutch Shell and Eni
• Estimated cost: $800m – €1bn
• Approval by Cypriot parliament in April 2019
• Alternative: Cypriot LNG Vasilikos project with an estimated total cost of €500 million• in 2016 following the completion of a feasibility study the government of Cyprus decided to proceed with the development of a LNG
terminal in Vasilikos Bay, near Limassol
• in October 2018 the government launched a tender calling for the construction of the facility by November 30, 2020
• Capacity: 1.3 mtpa, 0.19 bcfd (import)/5.0 mtpa, 0.72 bcfd (export)
• the European Commission is supporting the project with funding of €101 million
• Eastern Mediterranean Gas Forum• Recently formed by Egypt, Cyprus, Greece, Israel, Italy, Jordan and the Palestinian Authority
• in an effort to create a regional gas market, cut infrastructure costs and offer competitive prices
• bringing together underused and scalable export infrastructure with several promising fields is the key to unlocking untapped regionalpotential
The market potential of Cyprus
14
15
The market potential of Cyprus
TAP
• Length: 1,900 km
• Depth: 3000 meters
• will begin in the natural gas fields off the coast of Israel
• continue via Cyprus and Crete to the Peloponnesian peninsula
• on mainland Greece the pipeline will meet the planned “Poseidon”
pipeline (300 km) which will end in Oradea, Italy
• Capacity: 10 billion cubic meters (BCM) per year to the EU
• 10-15% of the EU’s projected natural gas needs
• Capacity could double
• Estimated cost: >€6bn
• US Geological Survey has projected that enough gas will eventually
be found in the eastern Mediterranean to meet regional and
European power demand for decades
THE EASTMED PIPELINE: FROM THE EASTERN MEDITERRANEAN TO EUROPE
The East-Med pipeline (IGI Poseidon)
EUROAFRICA POWER INTERCONNECTOR
• Signed in May 2019
• between Cyprus based firm EuroAfrica and Egypt
• an estimated 2 billion euro deal
• 300 km subsea electricity cable
• 1st power interconnector between Africa and EU
• Implementation: 36 months from start of construction
• Capacity: 1,000MW
• can be upgraded to 2,000MW at a later stage
The market potential of Cyprus
16
BREXIT EFFECT?
The market potential of Cyprus
17
311
375
540
388
503
603
209 211
128
322
168 166
891 872
1.041
1.158
1.254
1.328
0
200
400
600
800
1.000
1.200
1.400
2013 2014 2015 2016 2017 2018
IMPORTS OF GOODS FROM UK (in mil. EUR) EXPORTS OF GOODS TO UK (in mil. EUR)
Tourist arrivals from UK (in thousands)
Refe
rendum
Source: Cystat, Eurostat
NEXT EVENT IN CYPRUS – BUSINESS MISSION ON TOURISM14. – 16.10.2019
The market potential of Cyprus
18www.wko.at/service/Veranstaltung/Zypern/WiMi/Tourismus
Thank you for your attention!
Dr. Gerd Dückelmann-Dublany
Österreichisches AußenwirtschaftsCenter Athen
T +30 210 884 37 11
W wko.at/aussenwirtschaft/zy