Cyprus ‘could generate electricity from natural gas by 2025’ (updated)

The island could generate electricity from natural gas by the middle of 2025, Energy Minister George Papanastasiou said on Tuesday giving an optimistic forecast on the progress of the liquefied natural gas (LNG) terminal at Vasiliko.

He said that now relations have been mended with contractor CPP-Metron Consortium Ltd (CMC), the project could be finished by the end of 2024, and if the electricity authority (EAC) prepares accordingly power production could start from the following year.

The minister clarified that the end of 2024 for the LNG terminal is a timeline proposed by Cyprus. The contractor would provide its own binding timeline in two weeks’ time.

“We assess that by late July 2024 everything will be ready for works to restart intensively,” he added.

Speaking to reporters following a cabinet meeting, Papanastasiou recalled that the project is mostly European, having received €101 million in funding from European bodies.

Asked if there was a risk to the EU funding, the minister said the European Commission is closely monitoring the project which has so far been extended several times, “so those who fund the project are actually worried about its implementation.

“There has been some concern on the part of the project’s backers, but with the latest developments showing the project is heading in the right direction, and with some close monitoring from the energy ministry, I am certain we are heading towards the completion of the terminal,” he said.

The project consists of two parts, the minister said, adding the issue regarding pending certification for the floating, storage and regasification unit (Fsru) would “clear up” within the week during a scheduled conference call.

Last week, the minister confirmed that construction of the terminal was to recommence, following a meeting on Friday between his ministry and the Chinese-led consortium responsible for the project.

At the time he had said the meeting “took place in extremely good spirits”, and that “we have agreed on four or five measures which each side will take so the terminal can be completed.”

The minister told CyBC radio on Tuesday that project management issues were discussed at length during the meeting, clarifying that currently the two sides have not touched on financial aspects of the deal, “because the Natural Gas Infrastructure Company (Etyfa) and the Natural Gas Public Company (Defa) were not present at the meeting”.

Papanastasiou added that the two parties took measures to restore the trust between them, which had been eroded recently.

He revealed the government had come to the verge of cancelling the contract. The minister conceded that both sides were responsible for the lack of trust between them, adding that the dispute was not only due to financial issues – although he did not elaborate.

The dispute arose following the consortium’s decision to halt works in late January, and its move to claim €200 million from Cyprus in arbitration proceedings at a London court.

But reiterating his statements from Friday, the energy minister said that during the meeting, it was decided that his ministry will create a body that will monitor the project in the field as well as a supervision group with the aim of solving problems that may arise before they escalate.

This group will monitor the project from the ministry’s point of view without getting involved with Etyfa’s or Defa’s contractual obligations.

Papanastasiou also said that the consortium intends to fly in more personnel from China to boost the works, adding that visas for them will be arranged with the help of the state.

More specifically, 120 staff members have been indicated in addition to the workers already in Cyprus, most of them specialists in the construction of piers, who will also help with welding on the land terminal.

The minister said that on Saturday he visited the site with President Nikos Christodoulides, who wanted to see for himself what is happening in Vasiliko.

“And yes, we had a very good meeting in addition to the meeting we had at the ministry on Friday, during which a commitment was made before the president that the company is proceeding with the completion of the terminal and with the delivery of the ship, hopefully in the coming weeks,” he said.