Cyprus on Tuesday confirmed that Israeli firm Delek has submitted a proposal to build a liquefied natural gas facility on the Mediterranean island and that Nicosia has not ruled out cooperation with the Jewish state.
"There is a letter addressed to the president of the Republic from Delek which declares an interest and presents a proposal of cooperation on this issue," Commerce Minister Antonis Paschalides told reporters.
"Any decision to be taken will be made in such a way that it takes into account developments happening around us and, of course, our own reserves," he added.
According to reports, Delek has proposed the creation of a liquefied natural gas facility on the island to process deposits that Israel has discovered offshore, which Cyprus hopes to exploit.
On Tuesday, local daily newspaper Phileleftheros made public the letter in which Delek suggested establishing a multi-purpose terminal which would process gas deposits at a location of the government's choosing.
Delek says such a deal would transform Cyprus from a state totally reliant on gas and oil imports, to a net exporter.
"We are confident that this project will enable Cyprus to meet domestic energy needs from a clean and cheap source and convert Cyprus, an importer of energy, into a regional hub for exporting gas."
Last month, Cyprus and Israel signed an agreement defining their sea border, which allows the two countries to forge ahead in the search for energy sources in the eastern Mediterranean.
Cyprus has signed delineation agreements with Egypt and Lebanon, agreeing to mutually exploit hydrocarbon deposits that are located along their borders.
The Israeli company is a partner of US energy firm Noble, which has reported large reserves of natural gas in two Israeli offshore fields.
Last month, Delek and its Texan partner announced the discovery of 16 trillion cubic feet (453 billion cubic metres) of natural gas in the Leviathan gas field some 60 kilometres (40 miles) from Cyprus's exclusive economic zone.
It is said to be one of the largest of such finds over the past decade.
Noble also has the rights to drill for hydrocarbons within Cyprus's exclusive economic zone, close to the Israeli blocks.
In a separate move, Cyprus's state electricity authority is seeking a strategic partner to build a 600 million Euro ($802 million) liquid natural gas regasification terminal on the island's southern coast.
The government has yet to decide on the issue but Paschalides said earlier this month that Shell had made the best offer, at 4.5 billion Euros, to supply Cyprus with natural gas over a 20-year period.
A second licensing round for offshore oil and gas exploration is scheduled for the latter half of this year, after the process was first launched in 2007.
Turkey has voiced its disapproval of Cyprus's oil and gas search and reacted negatively to the involvement of Israel, Egypt and Lebanon.