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* Turkey says attempts to tap reserves illegal *
Cyprus on Wednesday formally decided to launch a new hydrocarbons licensing round, buoyed by growing indications of natural gas deposits and defying old foe Turkey, which disputes its exploration rights.
The cabinet said it decided to invite proposals for up to 12 offshore plots. An additional block is already under concession to U.S. based Noble Energy which launched an exploratory gas drilling in September.
Turkey has challenged Cyprus's jurisdiction in searching for oil and gas saying the natural wealth also belongs to Turkish Cypriots.
Earlier on Wednesday, Turkey's Energy Minister Taner Yildiz said Cypriot and Israeli energy exploration was illegal and that any discoveries in the east Mediterranean basin should be equally shared.
Noble's Cypriot concession lies close to significant gas finds by Israel in the past two years. Initial tests found reserves estimated at 3 to 9 trillion cubic feet, compared to 16 Tcf in israel's neighbouring Leviathan Basin, also explored by Noble.
Cyprus launched its first licensing round in 2007 when only Nobleshowed interest. Based on government documentation, there are 12 blocks remaining, even though 2 of them facing Lebanon were excluded from the 2007 licensing round as the parliament in beirut has yet to ratify an agreement delineating the Exclusive Economic Zones between the two countries. Cyprus already has an EEZ agreement with Egypt and Israel, and said it planned a similar agreement with Greece on its western EEZ sector.
Government spokesman Stefanos Stefanou said it would take up to six weeks to prepare the necessary documentation and the invitation for the public submission of proposals to be published. Companies would then have three months to submit proposals to consultants. The consultants would subsequently short-list companies and make recommendations to the energy minister. The cabinet will take any final decision, Stefanou said.
Asked whether the process would be concluded within 2012, he said: "I wouldn't rush to predict when this process will be done, there is a timeframe for this in the law and in EU directives. Today the cabinet decided that these procedures be set in motion for the second licensing round."
The results of Noble's exploratory drilling are anticipated in early to mid December.
