Cypriot President says gas find may help resolve island's division

NICOSIA (Reuters) - President Nicos Anastasiades said discovery of natural gas around Cyprus could galvanise international efforts to resolve a long-standing division of the island and smooth development of an alternative energy supply source to Russia.

But he said it was too early to speak of tangible progress in recently relaunched peace talks on the ethnically split island. Deep differences persisted between rival Greek and Turkish Cypriots that have defied the efforts of diplomats and politicians over four decades.

Almost one trillion cubic metres of recoverable natural gas has already been discovered in the eastern Mediterranean Levant Basin, enough to supply Europe with gas for over two years.

Anastasiades said the discovery and the potential prosperity it could bring to countries in the region brought the need for peace into sharper focus.

"It is important for Europe and the United States," he told Reuters in an interview on Wednesday.

"Europe will never stop needing Russian gas but there can be alternative supply sources," Anastasiades said.

European states have become wary of heavy dependence on Russian energy since Moscow's annexation of Ukraine's Black Sea Crimea peninsula last month. Russia provides around one third of the European Union's oil and gas.

But division of the island and competing territorial claims could complicate development of the new fields, which extend also towards Israel.

Turkey, which backs the breakaway northern Cyprus territory, disputes Cyprus's rights to a swathe of sea to the island's south and southeast that are rich in gas reserves. It has on a number of occasions sent warships to the area.

Cyprus says the waters are part of its own offshore area, where it has awarded research concessions to France's Total TOTF.PA, U.S. company Noble Energy Inc NBL.N and South Korea's Kogas 036460.KS.

INTERNATIONAL PLAYERS

Two senior U.S. State Department officials have visited the island over the past two months, lending support to Anastasiades's call for "bold" confidence building measures.

That includes the Turkish military relinquishing control of a now fenced-in seaside ghost resort whose Greek Cypriot residents fled in 1974, and operating a Turkish Cypriot seaport under EU supervision to facilitate direct exports to the bloc.

"There is a lot of interest by international players, and Europe. I hope that at some point we could be in a position to make a relevant announcement but it's premature to say anything for certain," Anastasiades said.

Anastasiades said confidence building measures could go a long way in restoring faith in the process among a public jaded with peace initiatives that have come and gone over the decades.

"People are tired, disappointed from a non-solution," said Anastasiades, a conservative whose presidential building in Cyprus's ethnically-split capital still carries shrapnel damage from an abortive coup by Greek Cypriot militants in 1974, triggering a Turkish invasion days later.

Anastasiades, who oversees peace talks in his capacity as Greek Cypriot leader, restarted negotiations with Turkish Cypriot leader Dervis Eroglu in February.

"At this point the initial positions of the sides are being submitted, so it would not be possible to expect any so-called progress," said Anastasiades.

"Progress is the fact that we are back in a dialogue, with a framework which we must all focus on, so that negotiations do not deviate from that framework."

Eroglu and Anastasiades agreed in February to relaunch peace talks on the basis of an agreed agenda, calling for the creation of a partnership under a federal umbrella in tune with EU standards.

"There is a gap in our positions, a gap in the positions of the Turkish side and even more so from the European acquis," Anastasiades said, referring to EU rules and regulations.

He said that any impression given by Turkish Cypriot negotiators that the sides were at a bargaining stage were 'false' "Im not saying this to accuse anyone, or to enter a blame game...I wish it were like that, but we are not there."

Cyprus has been divided since the Turkish invasion in 1974, but the seeds of division were sown much earlier, when a power-sharing Greek-Turkish Cypriot administration crumbled in 1963, just three years after independence from Britain.

Many Turkish Cypriots withdrew into enclaves, and a U.N. peacekeeping force, deployed in 1964, is one of the world's longest serving worldwide. Only Turkey recognises northern Cyprus as a legitimate state.

Four decades on, the troops sent in by Ankara have not left, frustrating Turkey's bid to join the European Union, where Greek Cypriots represent the entire island.

(Reporting By Michele Kambas; editing by Ralph Boulton)