The island's cabinet said it had formally 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, the only country to recognize a breakaway state in northern Cyprus, has challenged Cyprus's jurisdiction in searching for oil and gas. It says the natural wealth of Cyprus also belongs to Turkish Cypriots, who do not participate in the island's internationally-recognised government.
Earlier 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.
Cyprus, which is internationally recognised and a member state of the EU, says exploring for oil and gas is within its rights. Areas it has defined for exploration all lie to its south, clear of the line which has divided the island for decades.
"The government stresses once again its determination to exercise its sovereign rights in the economic exploitation zone of the Republic, always in accordance to international law," government spokesman Stefanos Stefanou said.
The island was split in a Turkish invasion in 1974 after a brief Greek inspired coup. Talks are underway to soothe frictions, but attempts are confounded by years of separation and deep-rooted distrust and bitterness on both sides.
Cyprus launched its first licensing round in 2007. The licensing round decision concerned "all exploration blocks" with the exception of the block under concession to Noble, Stefanou said. Based on government documentation, there are 12 blocks remaining, even though 2 of them facing Lebanon were excluded from the 2007 licensing round.
Stefanou said it would take up to six weeks for authorities 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. Noble has said the prospect is estimated to contain 3 to 9 trillion cubic feet of gas -- a discovery which would make Cyprus, with estimated needs of 1 billion cubic metres per annum, self-sufficient in the fuel for decades.
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