* Cyprus issues gas licences as it awaits bailout
* Island sits in resource-rich Med basin
* Made its first natgas discovery in 2011 (Adds detail)
By Michele Kambas
NICOSIA, Jan 24 (Reuters) - Cyprus licenced Italy's ENI and South Korea's Kogas for offshore gas exploration on Thursday, in a boon to an economy in line for an international bailout because of its exposure to debt-crippled Greece.
The island, which discovered natural gas at sea in Dec. 2011, issued licences covering three offshore areas lying south and south-east of Cyprus to a consortium made up of both firms.
"The discovery of hydrocarbons (around) Cyprus, in conjunction with those found in the wider Mediterranean region, create new realities and prospects for the country," Cypriot energy minister Neoclis Sylikiotis said.
Cyprus sits in the Levant Basin, an area of the eastern Mediterranean thought to be rich in largely untapped reserves.
U.S. Noble Energy reported discovering between 5 and 8 trillion cubic feet (tcf) in Cyprus's first attempt to find natural resources offshore in Dec. 2011. Neighbouring Israel has made major natural gas discoveries there in the past few years.
Turkey, which lies north of Cyprus, has in the past voiced objections to the island exploring for oil or gas. Cyprus was split in a 1974 Turkish invasion after a brief Greek inspired coup and the exploration is being carried out by the internationally recognised Greek Cypriot government.
Now in line for an international bailout, cash strapped Cyprus hopes the prospect of sitting on sizeable hydrocarbons reserves will give its stuttering economy a boost.
The island sought aid from the EU and the IMF in June 2012 to recapitalise a banking system badly exposed to Greece, and because of fiscal slippage.
It expects to conclude in March a bailout deal anticipated to be as high as 17 billion to 17.5 billion euros, equivalent to its national output.
In signing production sharing contracts with the consortium of the two companies, the state will earn 150 million euros, badly needed as Cyprus has been limping along on short-term high-yield borrowing for the past few months.
Speaking to Reuters before the signing ceremony on Thursday, Sylikiotis said separate talks with France's Total, bidding for another two blocks, were progressing well.
"I would say we are close to concluding," he said.
"There are very strong indications of gas, and possibly oil, in the area," Sylikiotis said, referring to the offshore maritime area known as the exclusive economic zone.
He said there would be synergies from the licensing to ENI and Kogas, since two of the blocks run in the path of a pipeline planned to transport gas from the Noble concession to a terminal which will convert gas into its liquefied form onshore. (Editing by James Jukwey)