Gulf investments grow in Cyprus both onshore and off

Gulf energy, communications, health and shipping companies have been taking a closer look at Cyprus – both offshore and onshore.

Out at sea, Qatar Energy is pushing forward with natural gas exploration – and may soon be joined by the Abu Dhabi National Oil Company (Adnoc).

Meanwhile, Taqa, the Abu Dhabi energy and water company, is reportedly interested in a massive underwater electricity interconnection project. 

Onshore, that emirate’s Pure Health bought a 60 percent stake – worth $2.3 billion – in Hellenic Health Care (HHC) in January. HHC operates three of Cyprus’s most well-known private hospitals.

Pantelis Leptos, president of Leptos Estates, a leading Cypriot developer, told AGBI last year that three Gulf sovereign wealth funds were in discussions to invest in real estate projects in Cyprus. 

At the same time, the internationally recognised Republic of Cyprus, which controls 60 percent of the island, has been contacting Gulf shipping interests. The island remains divided after Ankara sent in forces in 1974 to protect the island’s Turkish minority and set up a local administration.

Government of Cyprus

In February, Marina Hadjimanolis, Cyprus’s maritime minister, signed two memoranda of understanding with Oman, boosting maritime cooperation. She then went to Doha to make the case for Cyprus at Seatrade Maritime Qatar.

That case is an economically buoyant one, as the island’s economy is expected to grow this year at a rate of nearly 4 percent, much faster than the average of 1 percent among European union member states, according to Eurostat. 

“Cyprus has shown itself to be a bit of a ‘Teflon’ economy,” Fiona Mullen, director of Sapienta Economics, a consultancy, told AGBI by phone from Nicosia, the capital. 

The country has bounced back from a 2013 financial meltdown, as well as the Covid-19 pandemic, which devastated the island’s vital tourism sector. 

Cyprus then also survived a major outflow of Russian investment – an inflow that in recent years had led to the port of Limassol being unofficially renamed “Limassolgrad”. The government has been criticised for giving passports to international fugitives from justice, including Russian and Ukrainian oligarchs and Jho Lho, the alleged architect of the massive 1MdB fraud. Cyprus revoked Lho’s citizenship in 2024.

Much of that investment halted after Russia’s invasion of Ukraine in 2022, when EU sanctions cut off and froze Russian assets. 

However, “just as that happened,” Mullen says, “more business from neighbouring Lebanon and Israel started coming here”. 

The island has also long been used as a haven by Lebanese and other Arabs fleeing violence and civil war at home.

  Krisztina Papp/Pexels

Cyprus’s trade with the Gulf has shown steady growth in recent years. Figures from the Cypriot central bank show a net foreign direct investment outflow from Cyprus to the Gulf countries of €747 million ($814 million) in 2019. This has since reversed, with the most recent data – for 2023 – showing a net inflow of €418 million.

The maritime sector demonstrates some of the reasons why Cyprus is attractive to Gulf investors. 

“Gulf-based businesses look to Cyprus for corporate structuring, ship management and legal and financial support,” says Stella Georgiadou, head of shipping with Limassol-based AGP Law. “This is largely because of Cyprus’s EU membership, stable regulatory environment and competitive tax incentives.”

Although the Greek side of the island is a member of the European Union, Cyprus uses English maritime law – a gold standard globally – while also offering some of the lowest tonnage tax rates in the EU. It also offers an established infrastructure for marine services and competitive operating costs, compared with Mediterranean rivals, according to promoters.

Dubai’s DP World is one of the biggest investors in Cyprus. In April 2016 DP World Limassol was awarded a 25-year concession to operate a terminal in the island’s main port.

Aramco, the Saudi state oil company, is an important shareholder in the Cyprus-based Global Maritime Fund, which provides financing for maritime companies.

The island’s legal and tax benefits have counterparts in other sectors. Cyprus “is now promoting itself as a location for headquartering,” Mullen says. “This can be your EU HQ, with frequent flights from here to Dubai and Doha. This appeal does now seem to be gaining some traction.”

The leading light in Gulf investment, however, has long been the energy sector.

Qatar Energy is in partnership with ExxonMobil to develop Cyprus’s offshore natural gas blocks. The two are currently exploring the highly-promising Electra field.

“The prospects there are pretty good,” Charles Ellinas, CEO of Cyprus Natural Hydrocarbons, says. “The companies are quite buoyant about it.”

With a range of other blocks being explored, the Cypriot energy minister George Papanastasiou, confirmed to Reuters last November that Adnoc was also interested in Cypriot offshore assets.

The minister also said that Taqa was interested in the planned Great Sea Interconnector project. Electricity is a strategic concern for Cyprus as the island is isolated from neighbouring grids. The project is a €2 billion undersea electricity cable that will connect Greece with Cyprus, then later, potentially on to Israel. 

“The UAE has been noticing that there is a lot of activity in interconnector cables and wants to get involved,” Mullen says.