Kuwait and Cyprus said on Tuesday they would explore reciprocal investment opportunities, such as in energy and services, as they signed a deal to avoid double taxation of companies operating in the two countries.

'We think that there are a lot of opportunities in Cyprus either with the government of Cyprus or directly with the private sector,' said Kuwaiti Finance Minister Mustapha al- Shamali.

He added that Cypriot businesses, particularly services, could invest in Kuwait.

Asked whether Kuwait's potential investments in Cyprus could include the energy sector, al-Shamali said: 'Yes. Our investments cover all fields. In the energy sector we could help.'

Cyprus has recently started its foray into hydrocarbon exploration, opening up offshore sea plots to potential exploitation in 2007. Officials say they are preparing a new licensing round, where plots are made available for potential hydrocarbon exploration and exploitation. They have not been specific on the timing.

Al-Shamali said Kuwait could offer Cyprus help in tackling its chronic water shortages. Cyprus is one of the most arid member states of the EU and is increasingly reliant on water desalination to meet its needs.

“We have the technical know-how in desalination,' al-Shamali said.

The treaty on the avoidance of double taxation ensures that a business is not taxed twice on its activities.

'It's an important and necessary step in maintaining and expanding the economic and commercial relationship between the two countries,' said Charilaos Stavrakis, the Cypriot finance minister. – Reuters