1. Conference and Plenary Meeting of the PCC in Cyprus Title Speaker: Varnavas Pashoulis Senior Land Valuation Officer, Valuation Section (BSc Land Mgt, MBA, Proj. Man, MRICS, Member of ΕΤΕΚ) CYPRUS LANDS AND SURVEYS DEPARTMENT 4/8/20151 Natural Gas and the Impact on Property Market in Cyprus

2. Conference and Plenary Meeting of the PCC in Cyprus Table of Contents 4/8/20152 1.The International and Regional Markets of Natural Gas (NG) 2.The NG reserves found in the Exclusive Economic Zone (EEZ) south of Cyprus 3.The Cyprus Economy and the Property Market 4.The impact of the NG on the Cyprus Economy 5.The impact on the Property Market 6.Expected signs of Recovery

3. Conference and Plenary Meeting of the PCC in Cyprus The Intern. Regional Markets of N.G. (cont.) 4/8/20153 Energy Prediction Energy demand/supply difficult to predict due to the turbulent environment. Examples of failure to predict: i.Changes in Nuclear Energy - Japan Fukushima accident - high gas demand and prices in Asia- changing policies in EU. ii.Shale gas in USA the last 5-10 yrs. Investments on import LNG regasification terminals were made and now thinking to export liquefaction facilities

4. Conference and Plenary Meeting of the PCC in Cyprus The Intern. & Regional Markets of N.G. (cont.) 4/8/20154 Non-OECD economies drive energy consumption growth… Energy growth 96% from Non-OECD, and 4% from OECD Gas & non-fossil fuels gain share against coal and oil Fastest growing energy: renewable 8,2% p.a, NG 2,1% p.a, oil the slowest 0,7% p.a

5. Conference and Plenary Meeting of the PCC in Cyprus The Intern. & Regional Markets of N.G. (cont.) 4/8/20155 source: ExxonMobil 2012 outlook for Energy

6. Conference and Plenary Meeting of the PCC in Cyprus The Intern. & Regional Markets of N.G. (cont.) 4/8/20156 Import dependencies arise in Asia and Europe BP Energy Outlook 2030

7. Conference and Plenary Meeting of the PCC in Cyprus The Intern. & Regional Markets of N.G. (cont.) 4/8/20157 Europe Energy Demand Vs Supply

8. Conference and Plenary Meeting of the PCC in Cyprus 3. The N.G reservoirs in the EEZ of Cyprus 4/8/20158 Granted License for NG exploration Plot Number (block) Noble Energy USA (already granted) 12 Eni – Italy Kogas- S. Korea 2-3 (under negot.) Total E&P Activities Petrolieres (operator), NOVATEC Overseas Exploration & Production GMbH and GPB Global Resources BV from Russia 9 (under negot.) Total E&P Activities Petrolieres 11 (under negot.)

9. Conference and Plenary Meeting of the PCC in Cyprus The NG reserves found in EEZ of Cyprus 4/8/20159 Surveys suggest more than 100 trillion cb.f (2.831 trillion cb.m) of reserves in the EEZ of Cyprus Equals almost world’s total annual consumption According to Noble Energy, block 12 only, is estimated to have mean average of 7 trillion cb.f LNG Storage plant needed in Cyprus cost: Phase A (6yrs) = 10bn, Phase B = 8bn, Phase C = 6bn Early October 2012, the government established a new Hydrocarbon Company (KRETYK), 100% state ownership NG for domestic use by 2015 and commercial exploitation by 2019

10. Conference and Plenary Meeting of the PCC in Cyprus 4/8/201510 The NG reserves found in EEZ of Cyprus (cont.) Expected Revenue = International NG prices Vs Extraction cost Total capacity of 13 Blocks: 20 yr exploitation life span, 25% ! profit, NG price say ＄ 3,5bln/tcf ( ＄ 3,5 - ＄ 4,25/tcf), USD1,28: EUR1. Reserve EstimateReserve Value (EUR bln) Annual Income (EUR bln) Gov. Income p.a (EUR bln) 7 tcf24,51,250,25 1552,52,650,66 2587,54,381,1 501758,75 ≃ 2,19

11. Conference and Plenary Meeting of the PCC in Cyprus 4/8/201511 The NG reserves found in EEZ of Cyprus Forecasting on a 20 yr period ahead is risky Assuming 50 tcf of reserves, annual income is 2,19bl Cover gov. budget deficit of 17,5 bn in 5-10 yrs time horizon (excluding exposure in Greek market) Subsidiary infrastructure required in Vasiliko area Vasiliko Area Energy Center

12. Conference and Plenary Meeting of the PCC in Cyprus 4. The CY Economy and the Property Market 4/8/201512

13. Conference and Plenary Meeting of the PCC in Cyprus 4/8/201513 The CY Economy and the Property Market (cont.)

14. Conference and Plenary Meeting of the PCC in Cyprus 4/8/201514 The CY Economy and the Property Market (cont.)

15. Conference and Plenary Meeting of the PCC in Cyprus 4/8/201515 The CY Economy and the Property Market (cont.) 60% up

16. Conference and Plenary Meeting of the PCC in Cyprus Property Market 4/8/201516 RICS Cyprus Average price index (All types) R A W H O

17. Conference and Plenary Meeting of the PCC in Cyprus 4/8/201517 5. Impact of NG on CY Economy Total expected income from N.G exploration Reserved to finance N.G infrastructure projects Reserved for the Government Development Budget and (cover loan repayments to Troika) Reserved for Future Generations Revenue is to be exploited in three areas (i.e. Norwegian Model)

18. Conference and Plenary Meeting of the PCC in Cyprus Impact of NG on CY Economy (cont.) 4/8/201518 (i) DEFA – N.G. PLC company controlled by state – Totally responsible CY Gas Internal Market – CY Gas Distr. Network Total Est. cost € € 500m Phases (A, B, C) Phase A: €60 m Compulsory Acquisition of Properties and Rights

19. Conference and Plenary Meeting of the PCC in Cyprus Impact of NG on CY Economy (Cont.) 4/8/201519 € (ii.) Submarine gas pipelines (200 km) – Estimated cost € 1,56 bln (iii.) Exploration (2 nd round of license) Expected income from signatures € 200m (iv.) Construct LNG (liquefied) Terminal – Estimated cost € € 7,8 bln (v.) Demand for specialized services (Financial, legal, real estate, electromechanical, engineering, construction, energy piping, logistics etc). Human Resource Development Authority study: Yrs 2015 to 2019 - 4.000 new jobs (vi.) New dynamic markets for Port Authorities and shipping industry (new ports, jetty, platforms, reservoirs etc)

20. Conference and Plenary Meeting of the PCC in Cyprus Impact of NG on CY Economy (Cont.) 4/8/201520 (vii.) Research, Development and education will be promoted through the N.G activities e.g  University of Nicosia: M.Sc in Oil, Gas and Energy Mgt  Frederick University: M.Sc in Oil, Gas and offshore eng.  University of Cyprus: M.Sc in Petroleum engineering  Intercollege: offers oil and gas Diplomas  Disaster management and environmental and seashore pollution issues

21. Conference and Plenary Meeting of the PCC in Cyprus R & D Statistics 4/8/201521 30 yrs to reach EU av.

22. Conference and Plenary Meeting of the PCC in Cyprus 5. Impact of N.G on Property Market 4/8/201522 (i.) Need to establish a property strategy to accommodate basic Infrastructure for N.G, thus: Master plan for the main and subsidiary uses as well as future developments in the area (mainland and sea) Capacity building Need to rezone specific areas and define buffer zones Impact Assessment study for the region Security and safety measures for the region (ii.) Land Acquisition Issues (compulsory acquisition, Land Assembly, Reclamations, buy/sell/lease, property rights)

23. Conference and Plenary Meeting of the PCC in Cyprus Impact of NG on CY Property Market (Cont.) 4/8/201523 Calendar of Activities/EventsYear (timing) Investment costEffects 1.(a) Construction : Phase A: New 20 oil tanks at Vasiliko (357.000 m3) and 1,2 Km jetty-VTTV Vasiliko Ltd 2012- 2014 €300 m 1.000 casual jobs, 60 perm. Improve current economic climate Est. Gov. Rev. €16 m p.a. (b)Phase B: Another 9 oil tanks at Vasiliko (286.000 m3) 1 st Qrt. 2014 Improve current economic climate 2.(a) New - CY N.G Distribution Network infrastructure (Phase A) 2013- 2014 €65m>> (b) CY N.G Distribution Network infrastructure (Phase B and C) 2018-€500m>> 3. Development of LNG Terminal for internal use and exports 2013 - 2019 €10blnsEconomy is expected to improve 4.(a) Estimated Revenue per year (b) Rprt my Merrill Lynch on viability of CY – Expected Revenue 2018 -€2,2 bln p.a Between €1.7 to €2.4 billion p.a Repayment of CY debt Banks €10 bln Gov. maturing debt €6bln Gov. public fin. €1,5 bln

24. Conference and Plenary Meeting of the PCC in Cyprus 4/8/201524 Impact of NG on CY Property Market (Cont.) Oil tank investments at Vasiliko by VTTV Distribution of CY Gas on mainland Energy Center

25. Conference and Plenary Meeting of the PCC in Cyprus 4/8/201525 6. Expected Signs of Recovery Signs of recovery will first appear in the industrial market, then commercial and finally residential and tourist market as a derived demand The speed of recovery will depend on the strategies and actions to be followed by the gov. to promote and secure:  Financial stability  Real development growth on the island  Reorganize gov. and semi gov. Sectors (not excluding part privatization i.e. 20%)  Service based economy & Tourist/Marina/sailing destin.  Modernize the existing econ. model (comp & comp. adv.)  Managing Resources (natural, HR)  R & D, etc Forecasted Real signs of ECO/PROP recovery after 2015

26. Conference and Plenary Meeting of the PCC in Cyprus 6. Expected Signs of Recovery - Property Cycles 4/8/201526 Where are we.! The question is the timing for recovery ! What do we until then ! And how we manage and best utilize our resources……..! !

27. Conference and Plenary Meeting of the PCC in Cyprus THANK YOU FOR YOUR ATTENTION WELCOME TO CYPRUS