The government has managed to buy time to offer explanations to the EU commission over the LNG project fiasco, Energy Minister George Papanastasiou said on Monday.

Speaking on CyBC radio, the energy minister faced ongoing criticism over the project, fanned last week by the double whammy of the European public prosecutor office’s (EPPO’s) announcement of the launch of an investigation and the EU’s demand for project funds to be returned.

“This government has done all it can to minimise the fallout,” Papanastasiou said.

Countering cover-up allegations, the minister said EPPO’s investigation into possible procurement fraud, misappropriation of EU funds and corruption, which has been ongoing since March, could not have been have been announced sooner by the state as this would have breached the EU’s information-sharing protocols.

The EPPO investigation is also “a completely separate matter” from the decision by the European climate, infrastructure and environment executive agency (Cinea) to request the return of the almost €69 million paid out for the project, from a pledged total of €101 million, he added.

The state had been aware that the European central audit office had agreed with aspects of auditor-general Odysseas Michaelides’ damning report on the project’s irregularities, and that the EU had concluded further investigation was warranted, he said.

Beyond this, however, his ministry had not known until July 24 that Cinea was going to proceed with a demand for a recall of funds. Intense negotiations had been going on for the past three weeks to prepare for the possibility of this scenario and to secure “the right to explain” what had happened, the minister said.

As a result, the state has now gained 30 days to do so.

“In theory the decision can be revoked. I cannot predict the chances of this,” he said.

In terms of practicalities, all efforts are now concentrated on the “worst case scenario”, that is, that the Chinese consortium responsible for delivery of the floating storage and re-gasification unit (Frsu) Prometheas, will not deliver it to the natural gas infrastructure company (Etyfa), which on paper owns it.

Re-iterating earlier statements, the minister said the project would somehow continue despite setbacks. It was not clear who within the consortium was putting the brakes on the delivery of the Frsu, Papanastasiou said, adding that efforts were being made to secure the ship.

However, the minister said stakeholders were proceeding with the procurement of an alternate ship for the purpose, a tactic some had claimed as unfeasible.

“We don’t want to be held hostage by [this] property claim,” the minister said.

Speaking to the Stockwatch media outlet, Papanastasiou gave a little more detail about the state of the LNG project after the Chinese-led consortium pulled out of the contract citing payment disputes among others

On upcoming developments, he said plans are underway to finish the remaining works at the land-based facilities at Vasiliko and which are estimated to cost around €40 million.

“Developments are also expected from Shanghai, regarding the release of the Prometheas vessel which the Chinese consortium CPP is holding to ransom and prevents from sailing to Vasiliko.”

Though not entirely ruling out that CPP might be swayed in letting the ship go, he said that was unlikely.

And according to the minister, in the coming days a foreign ‘expert’ will arrive in Cyprus to monitor progress on both the land-based facilities and the vessel.

Regarding the jetty and the on-land facilities, the government is drafting documents so that over the next few days it can issue a call for public tenders.

Once the tenders documents are ready, they would be published for 15 days for expressions of interest, and then another 15 days given to receive any actual bids.

“Because the project is incomplete, we’ll ask interested parties to visit the site, so they can know at what stage it is and so that procedures can be expedited.”

The minister claimed these works could be finished “within eight months”.

The Cypriot side still has the option to keep using the subcontractors of the Chinese consortium, as this is provided for in the contract’s severability clauses – aspects that are preserved when a contract is severed.

However, the minister stated that the government prefers to explore interest from new subcontractors. This would also help gauge interest in the project from the industry, which interest he said is “considerable”.

On the Fsru, Papanastasiou reiterated that Cyprus is proceeding with the worst-case scenario in mind, namely that a different vessel will have to be found.

On the outside chance that the Prometheas ship does set off from Shanghai, it would take about 35 days for it to reach Cyprus. If the ship does come into the physical possession of Cyprus, it would be certified as a regasification unit, either in Cyprus or at a shipyard abroad. Certification could take about two months.

Despite all the complications – technical and now legal – the minister insisted that the goal remains for Cyprus to have natural gas by the first half of 2025.

Papanastasiou declined to comment on the scope of the EPPO probe underway. But on the €68.6 million of the EU grant already disbursed, it might be ‘returned’ to the European Commission by the latter deducting the same amount from the Recovery and Resilience Facility or some other EU funds allocated to Cyprus.

Meantime on Tuesday the House energy committee will convene extraordinarily – as parliament is officially in recess – to discuss the LNG debacle. Papanastasiou will attend, as will the auditor-general, the permanent secretaries of the foreign and finance ministries, representatives of the attorney-general’s office, and the heads of Etyfa and Defa (Natural Gas Public Company).