Construction of LNG jetty set to start

Following long delays, construction of the jetty for the liquefied natural gas (LNG) terminal at Vasilikos is to begin next week, it emerged on Tuesday.

The Joint Rescue Coordination Centre in Larnaca has just published a Navtex (an advisory to mariners), according to which starting January 16 barges and tugboats “will be conducting marine operations for construction of LNG (jetty)” in the Vasilikos sea area.

The advisory is open-ended – it has no cancellation date.

In a related development, the Cyprus News Agency (CNA) reported that in a letter from Energy Minister Natasa Pilides responding to a query from Disy MP Kyriacos Hadjiyiannis she said although the contractor had a contractual obligation to commence works on September 28, 2020, the timetable was pushed back due to the Covid pandemic.

The contractor/consortium undertaking to build the infrastructure has submitted a revised work timetable, citing the supply chain problems caused by the pandemic.

Under the initial contract, the entire project was to have been completed by late September to early October of 2022. The revised timetable sought by the contractor places completion in July of this year – a delay of nine months.

The project’s promoters are Etyfa, a subsidiary of Defa, the natural gas public company.

With a price tag of around €300 million, the project has been dubbed the biggest ever in the field of energy in Cyprus. The facility, generating electricity from imported LNG, will include a floating storage and regasification unit (Fsru), a jetty for mooring the Fsru, a jetty-borne gas pipeline and related infrastructure.

A tanker is currently being converted into an Fsru at shipyards in Shanghai. The vessel is listed on the Cyprus ship registry under the name Etyfa Prometheas.

According to CNA, authorities here estimate that if China does not impose another harsh lockdown amid the new outbreak of Covid there, conversion works on the ship should wrap up this summer, at which time the Fsru would make the trip to the island.

In her letter, the energy minister noted that Etyfa never agreed to nor approved the revised timetable, and that this issue will be dealt with via a contractual dispute resolution mechanism.

Meantime the contractor had requested raising the contract value by €25 million, citing the increased cost of raw materials and equipment. The increase has been approved by Cypriot authorities.

That brings the project’s total cost to €315 million.

The project has secured a €101 million grant from the EU under the Connecting Europe Facility (CEF) financial instrument. The rest of the financing comes from the European Investment Bank and the European Bank for Reconstruction and Development.

In relation to the ongoing construction works at sea and on land, Pilides said the contractor has completed preliminary works at the construction site at Vasilikos. The offices have been installed and are fully operational (electricity, Internet), and earthworks are being completed.

The Cyprus Mail had earlier reported on the delays plaguing the project. Sources at the time said, for example, that between the awarding of the contract in December 2019 and the project’s kick-off meeting in September 2020, absolutely nothing was done with regard to the deliverable requirements of the contract.

The holdups had necessitated the personal intervention of President Nicos Anastasiades in early 2022.