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STEVE INSKEEP, HOST:

Let's go next to the island of Cyprus in the Mediterranean, part of which is an independent country, and is becoming - close to becoming the fifth eurozone country to receive a bailout to help avoid financial collapse. This small island-nation has potential to do better. It may be sitting on large natural gas reserves. The trouble is how to get at that wealth without causing trouble with Turkey. The island is divided between its ethnic Greek and Turkish communities, and Turkey still controls part of the island. Turkey doesn't want the independent part of Cyprus to grab a windfall for itself and is threatening military action to prevent drilling, which is going ahead anyway.

Joanna Kakissis visited Cyprus and sends this report.

JOANNA KAKISSIS, BYLINE: Twenty years ago, a Greek Cypriot engineer named Solon Kassinis said the Eastern Mediterranean held a treasure of hydrocarbons. At the time, few people were listening.

SOLON KASSINIS: Well, a lot of people, especially geologists, geophysicists, they didn't believe in the region. They didn't thought that there was oil and gas.

KAKISSIS: But Kassinis, who is now the energy chief of Cyprus, insisted that the conditions for gas and oil deposits were there. The Houston-based Noble Energy listened and began exploratory drilling in 2011. They worked on a block of the seabed called the Aphrodite gas field, located off the southern coast of Cyprus.

Here's Fiona Mullen, an economist following the project.

FIONA MULLEN: Noble Energy did the drilling in September and they announced in December that they had found an estimated seven trillion cubic feet - which is enough to supply domestic consumption for something like 200 years or something, so there's obviously spare for export.

KAKISSIS: Solon Kassinis now says Cyprus could make as much as $25 billion a year by selling the gas. That amount is equivalent to the country's GDP. But there is a complication: Cyprus's frigid relations with its neighbor, Turkey, which has even threatened military action to stop the drilling.

Turkey has occupied the northern half of the island since 1974. And division is a way of life here, says Ergun Olgun. He's a former presidential advisor to the Turkish Republic of Northern Cyprus, which is only recognized by Turkey. Olgun says the Greek Cypriots could have used the hydrocarbons discovery to unite with the Turkish Cypriots.

ERGUN OLGUN: Instead what we have is new alliances being built around Cyprus which are making the conflict even more dangerous, the alliances - for example, Cyprus and Israel, Turkish Cypriots and Turkey - deepening their own alliance by going into agreements with each other.

KAKISSIS: Cyprus could earn more money by piping the gas directly to Turkey, which is the nearest market and imports most of its fuel. Instead the Greek Cypriots plan to liquefy the gas and partner with Israel on a pipeline. Israel has fragile relations with Turkey, which is now drilling for oil on land in northern Cyprus.

(SOUNDBITE OF GENERATOR)

KAKISSIS: This giant generator powers a drilling site for the state-owned Turkish Petroleum Corporation. Supervisor Cem Cetin says Turkey doesn't plan to give any oil and gas it discovers to the Greek Cypriots.

CEM CETIN: If we can find any of them, we are going to share with Turkish Republic of Northern Cyprus.

(SOUNDBITE OF BIRDS CHIRPING)

KAKISSIS: The Turkish petroleum site is near a village called Sinirustu, where birds perch on an abandoned Greek Orthodox church. A Turkish farmer named Sabri Aydag lives nearby.

SABRI AYDAG: (Foreign language spoken)

KAKISSIS: The drilling will improve the village, he says, since Turkish Petroleum has already given farmers here 700 fields to grow barley and chickpeas. And Turkey is also planning to drill offshore, like many other countries in the region, says Praxoula Antoniadou-Kyriakou. She's a Greek Cypriot and a former energy minister.

PRAXOULA ANTONIADOU-KYRIAKOU: The whole of the eastern Mediterranean now, it is evident that it is loaded with hydrocarbons. It's Israel, Egypt, Cyprus; Lebanon now contemplates to start exploration.

KAKISSIS: If the countries decide to put the past behind them, she says, hydrocarbons could turn the region into a place of peace and prosperity. But she adds that the history here feels thicker than the seabed, and it's far more explosive than the gas that lies beneath.

For NPR News, I'm Joanna Kakissis.

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