Turkey to drill in northern Cyprus in March

Turkey will begin drilling for oil or gas in northern Cyprus towards the end of March, the head of state energy company TPAO said on Monday.

Any gas discovery in this area could raise the stakes in the negotiations over reunification of the island and possibly increase tensions in the eastern Mediterranean.

EU-member Cyprus started exploring for gas south of the island last September, angering Turkey, which retaliated by signing a pact with the Turkish Cypriot regime in the north paving the way for exploration sending the TPAO's Piri Reis exploration vessel.

"We're starting drilling in northern Cyprus in the coming days … We have started shipping our equipment there," TPAO chief executive Mehmet Uysal told Reuters on Monday, adding that drilling would start before the end of March.

"If there is a need to drill in areas where the licences clash, then we would take all measures," he said, without elaborating on what that meant.

Although it has limited fuel resources of its own, Turkey is surrounded by some of the biggest gas reserves in the world and is positioning itself as a key transit hub for Russian and central Asian gas supplies to Europe.

"We're hoping this will be a peace project because Turkey is the main outlet for this gas," Uysal said.

"All these companies drilling will have to send the gas to Europe and Turkey is the main route."

Ankara threatened the Greek Cypriot government after Texas-based Noble Energy discovered gas deposits south of the island and plans to drill an offshore block, making the island self sufficient in the key power generation fuel and offering an export option.