MVP

Tag: Vasiliko

  • Concerns Mount Over LNG Project Viability at Vasiliko

    Concerns Mount Over LNG Project Viability at Vasiliko

    The future of the LNG project at Vasiliko is in jeopardy as design flaws and structural issues have raised serious concerns, potentially leading to its cancellation.

    • The future of the LNG project at Vasiliko is in jeopardy as design flaws and structural issues have raised serious concerns, potentially leading to its cancellation.

    Reports surfaced on Monday revealing that the project may have to be scrapped or completely redesigned due to unsafe materials and significant technical problems. This news follows a report from television channel Omega, which highlighted ongoing “design and materials issues” that have halted progress.

    A source quoted by Omega stated, “There are very serious technical issues, which make it impossible to continue the work at this time. That is why the work on the pier has been at a standstill for months, and no timetable has been given by the authorities for the completion of the work.” This lack of clarity has left stakeholders in limbo.

    In response to the unfolding situation, Energy Minister George Papanastasiou acknowledged the government’s efforts at “damage limitation.” To date, the troubled LNG project has cost taxpayers approximately €320 million, with an additional €70 million requested by the government in March.

    Adding to the concerns, a former director at the Transmission System Operator (TSO), Christos Christodoulides, confirmed the reported deficiencies. He disclosed that the sub-contractor responsible for constructing the jetty at Vasiliko has declined to accept responsibility for the materials and infrastructure, which reportedly require extensive repairs or even remanufacturing.

    Christodoulides raised questions about how the government would attract new bidders to take over the project under these circumstances. Furthermore, he indicated that the project manager might consider rebuilding certain infrastructures at Vasiliko due to the lack of certification for critical equipment and materials already in use.

    Sources have suggested that some components ordered by the previous Chinese-led consortium lacked safety certifications. This includes high-pressure valves essential for safe operations. Such revelations have led many to speculate about the integrity of the entire project.

    In light of these challenges, Christodoulides proposed an alternative strategy: piping natural gas from the offshore Aphrodite reservoir. This plan would involve constructing a pipeline from the reservoir to the existing infrastructures at Vasiliko, allowing for a more immediate and reliable supply of natural gas for electricity generation.

    Such a solution could meet the island’s energy needs with only approximately 0.6 billion cubic metres of natural gas per year, providing a feasible ‘Plan B’ while the LNG project remains uncertain. However, pursuing this option would require the government to renegotiate the development plan with the Aphrodite concession holders.

    Even before the Omega report, Minister Papanastasiou hinted at the need for a potential “course correction” regarding the LNG project. Initially awarded in 2019 with a 24-month deadline for completion, the project has seen multiple missed deadlines from the Chinese-led consortium, which ultimately terminated the contract in July 2023, citing irreconcilable differences with the Cyprus government.

    The floating, storage and re-gasification unit (Fsru), a critical component of the LNG project, remains stuck in a Malaysian port for fitting, illustrating the severe delays and complications that have plagued this initiative.

  • Government Faces Pressure Over Vasiliko LNG Terminal Safety Concerns

    Government Faces Pressure Over Vasiliko LNG Terminal Safety Concerns

    vasiliko lng — The government is engaged in “damage limitation” following reports of “serious safety issues” regarding the construction of a liquefied natural gas terminal at Vasiliko, Energy Minister George Papanastasiou said on Saturday.

    His comments were prompted by a report from television channel Omega, which highlighted significant “design and materials issues” affecting the project. A source cited by Omega noted, “There are very serious technical issues, which make it impossible to continue the work at this time. That is why the work on the pier has been at a standstill for months and no timetable has been given by the authorities for the completion of the work.”

    In light of these revelations, the project coordinator is preparing a comprehensive report to be presented to the natural gas infrastructure company Etyfa or directly to Papanastasiou early next month. This report is critical as Papanastasiou will need to make final decisions on how to address the myriad issues plaguing the terminal’s construction. Any corrective measures could involve disbursing millions of euros, raising concerns about the financial burden on taxpayers.

    Within the energy ministry, there is “intense concern” as officials grapple with the legacy of past problems, emphasising the urgency to proceed with the terminal’s completion. However, should the report indicate that continuing as planned is unfeasible, Papanastasiou may need to take decisive action and identify those accountable for the existing issues.

    Papanastasiou confirmed on Saturday that the report is nearing completion and stated that responsibility for the problems encountered at Vasiliko will be assigned. He had previously announced that the government aimed for the LNG terminal’s construction to be finished by the end of this year. Yet, the latest developments suggest yet another setback in a series of challenges that have plagued this project over the years.

    The construction hit a major roadblock last year when the CPP-Metron Consortium (CMC) terminated its contract with the government. CMC accused Etyfa of “bullying” and claimed it had been left to work without proper or timely payments for years. They expressed frustration over the lack of relevant experience among Etyfa and its advisers, stating, “The position has become untenable. Contrary to the promises that were made by the [energy] minister in March, CMC has still not received any payment whatsoever for its work in 2024.”

    This dispute has resulted in significant delays, with the floating storage regasification unit (FSRU) at the centre of contention. CMC maintains that the vessel, initially ready for delivery in Shanghai, is now in Malaysia undergoing necessary modifications to meet project requirements.

    Further complicating matters, the European Commission demanded last July that Cyprus repay nearly €69 million in grants allocated for the terminal. The commission’s letter cited “possible irregularities” during the tender evaluation period and alleged two significant violations: the criteria for awarding the tender to CMC in December 2019 and the signing of a bilateral agreement for an additional €25 million in funding in June 2022.

    Additionally, the European Public Prosecutor’s Office (EPPO) has launched an investigation into potential procurement fraud, misappropriation of EU funds, and corruption linked to the Vasiliko LNG terminal. Cyprus signed the contract for this critical LNG project in December 2019, with an expected completion timeline of 22 months.