Cyprus returning European money for LNG terminal

The government is in the process of returning €67 million in funding for the LNG terminal in Vasiliko to the European Commission, the energy minister said on Tuesday, also telling MPs he could give no timeline for the completion of the project.

Michalis Damianos said the €67 million that had been granted through Cinea – the European Commission’s Climate, Infrastructure and Environment Executive Agency – was being returned in two ways: by deducting from other EU funds allocated to Cyprus, and the rest in ‘cash’.

The amount represents part of the roughly €101 million grant approved for the LNG project in 2017 under the EU’s Connecting Europe Facility. Only €67 million was disbursed.

Brussels’ demand for repayment followed allegations of irregularities in the tender award process to a Chinese-led consortium and the mismanagement of the project.

The European Public Prosecutor’s Office is also investigating for potential corruption.

Damianos had appeared at the House energy committee three weeks ago to brief MPs on the trajectory of the troubled LNG project.

On Tuesday, he was asked directly for a timetable on the completion of the project.

He replied that at this time he was not in a position to give a timetable. Not even Technip – the government’s current consultants on the project – could do that.

“Once we are able to give a timeline, we will.”

The minister reiterated that the government’s priority is for the project to restart “from where it left off”.

They are seeking a new contractor via a tenders process.

Asked about potential offers from others, Damianos confirmed that talks are underway with a contractor from the United Arab Emirates.

Disy MP Kyriacos Hadjiyianni asked whether this would mean an interstate agreement between Cyprus and the UAE, circumventing the process advised by Technip.

“Discussions [with the UAE] are still at an early stage,” the minister replied.

Regarding the ‘gap analysis’ prepared by Technip, Damianos said it’s currently being assessed by Etyfa – the state-owned natural gas infrastructure company, the owners of the project.

The ‘gap analysis’ is a technical report describing the status of the LNG terminal.

Hadjiyianni asked the minister to share the report with parliament.

Damianos said he’d seek legal guidance on whether that’s feasible.

The Chinese-led consortium walked out in July 2024, leaving the LNG project in limbo.

MPs grilled Etyfa officials over the amounts paid to technical consultants.

Etyfa boss Giorgos Ashikalis said the contract with Technip is worth €10 million.

Asked if Etyfa and Defa – the natural gas public company – possess the technical savvy to handle such a project, Ashikalis said that for several years Defa had just two functionaries.

“Today there are 12 members of staff, including the cleaning lady and the clerk.”

Defa has five engineers on staff – whereas to handle a project like the Vasiliko LNG, it should have 30 to 40 people.

In parliament, an official with the Audit Office said that in January they sent queries to the energy ministry, trying to gauge the status of the project and also get a feel for the government’s stance.

The responses were “unsatisfactory”.

Speaking to the media later, Hadjiyianni complained that no one is taking responsibility. Once again, he said, MPs got no straight answers from the government.

In fact, it has become clear that the government is stonewalling.

The Disy MP wondered whether something else is at play – whether the government has privately given up on the LNG terminal and is merely going through the motions.

“Perhaps the thinking is that if the gas from one of Cyprus’ offshore blocks gets liquefied in Egypt, then we don’t need the Fsru.”

The Fsru is the floating, storage and regasification unit – a ship fitted with equipment that takes LNG and converts the fuel back into its gaseous form.

The Prometheas Fsru is still moored in Malaysia.

On this, Akel MP Costas Costa said the vessel costs Cypriot taxpayers €470,000 a month while berthed in Malaysia.

The ship has yet to be certified for a one-way voyage to Cyprus, where it would dock at the jetty at Vasiliko. The jetty itself is half-finished.

The vessel also has not received certification as an Fsru.

“No one knows when it will come to Cyprus, or somewhere the Mediterranean, or wherever,” Costa remarked.