A third of the EU's gas demand is met by Russia, with almost half of that passing through Ukraine, which is in a pricing dispute with Russian gas exporter Gazprom. Europe has become wary of relying heavily on Russian energy since Moscow annexed Ukraine's Black Sea Crimea peninsula in March.

"Cyprus should be developed into an energy centre that helps to reduce other dependencies," Anastasiades said after meeting German Chancellor Angela Merkel.

Cyprus reported significant natural gas discoveries offshore in 2011, following important finds by Israel. Exploitation could however be complicated by territorial disputes between Cyprus and Turkey, which has occupied Cyprus's northern third since an invasion in 1974 after a brief Greek-inspired coup.

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

German Economy and Energy Minister Sigmar Gabriel said on Tuesday in Rome that there was no quick fix for Europe's energy dependence on Russia.

Anastasiades said Cyprus, which last year accepted an international bailout, would stick to its reform agreements but also warned that the island nation could face negative consequences from sanctions against Russia. "Unfortunately Cyprus is very dependent on Russia," he said.

Source: Reuters