The construction of the liquefied natural gas (LNG) terminal in Vasilikos will proceed and be completed despite the withdrawal of the Chinese consortium of companies from the project, Energy Minister George Papanastasiou assured on Sundady.
He confirmed that the work has been terminated by the Natural Gas Infrastructure Company (Etyfa) after the Chinese consortium CMC on Thursday terminated its involvement in the project.
The terminal will be completed in other different ways and a proposal that will soon be submitted to the President concerns its completion outside the contract, he said.
Commenting on the strategic importance of the terminal, the minister underlined that the project is necessary for the import of natural gas, which will help reduce the cost of conventional electricity generation and, consequently, electricity in Cyprus.
Etyfa, he said is the owner of all assets arising from the contract and has already taken delivery of the construction site in Vasilikos, which includes the unfinished pier and the onshore part of the terminal.
“There cannot be no agreement around this project,” the minister said.
Yes, he said, it is a matter of termination but again after termination there are clauses within the contract that survive and that indicate how to complete the terminal.
Through these clauses and of course in consultation with the Chinese consortium, he added, there will be a conclusion that will lead in some time to the completion of this terminal.
Meanwhile CMC said on Sunday that its subcontractor VPSM will not be used to complete the remaining works in Cyprus.
VPSM is a joint venture between Multimarine of Cyprus and Spanopoulos of Greece.
The company’s involvement in the project, CMC said, was terminated on March 14 due to its “continual lack of performance, substandard and subsequently rejected works, unjustifiable additional claims for the concrete fabrication works, and significant progress delays”.
CMC attributed the problems to Multimarine only.
CMC subcontracted the jetty superstructure to VPSM in November 2022, with an agreed completion date of September 30, 2023.
“Although the performance by the partner, Spanopoulos, was positive, the lead member, Multimarine, failed to meet all contractual milestones,” CMC said.
Despite CMC taking many proactive measures to correct, assist and support Multimarine “due to their numerous failures, Multimarine’s lack of construction knowledge, skilled/experienced personnel, adequate personnel numbers for a project of this size, lack of sufficient equipment, as well as their inability to accept instructions from CMC, ultimately resulted in their failure to meet any contractually agreed milestones,” the company said.
By March 2024 CMC said Multimarine had only constructed 40 per cent of all concrete structures pertaining to the jetty, the majority of which had all failed EU/Cyprus quality standards.
For this reason, CMC terminated its agreement with VPSM.
VPSM and CMC are now engaged in a claims process due to VPSM demanding a price increase of more than 300 per cent, on works it contractually undertook to execute, CMC said.
Introduction of natural gas, reinforcement of RES, competitive electricity market will bring a considerable reduction in the price of electricity, Papanastasiou said.
The introduction of natural gas is one of three pillars to support reduction of energy prices, he added.
The second is greater us of renewable energies and storage facilities, while the third is electricity interconnection which is currently being discussed between Israel-Cyprus and Greece.
These three, the minister said, will bring a serious reduction in the price of electricity, although they will not all take place at the same time.
