Friday, July 19, 2024

VASILIKOS TERMINAL - ANGUISH OVER THE FATE OF THE €190 million SHIP PROMETHEUS

 Filenews 19 July 2024 - by Chrysanthos Manoli



CPP officially quit yesterday, but that's not the worst thing that could happen, since months ago the company had abandoned the gas terminal construction site and left ETYFA hanging.

What burns the Government and the State-owned Natural Gas Infrastructure Company (ETYFA) is the fate of the Prometheus floating gas regasification plant, which remains in a shipyard in Shanghai and CPP's intentions are not known for the time being: It will facilitate the delivery of the vessel to its owner, ETYFA, since it has already paid about €190 million to convert it into an FSRU or will it keep it as collateral in view of its financial claims from the state?

The dispatch yesterday morning of notice of unilateral termination of the contract with ETYFA for the liquefied natural gas regasification terminal probably took the state-owned company by surprise. The people of CPP had given the impression that they had accepted as the only solution – a way out for both sides the mutually agreed solution of their cooperation, the delivery of the FSRU Prometheus to ETYFA and the waiting for the decision of arbitration that is underway in London for the millions claimed by one company from the other.

The focus of the previous negotiations was the floating LNG regasification plant, since it has already cost ETYFA about €190 million. but mainly because without it liquefied natural gas cannot be imported and processed in Vasilikos, for use in the production of cheaper and cleaner electricity.

Although messages had been sent in the previous days that there was the prospect of a final agreement, it seems to have foundered, without the reason for this development being known. It was previously confirmed that CPP was demanding around €30-35 million from ETYFA to consent to the delivery of the vessel, but it is a fact that the two sides are separated by financial disputes of much larger amounts and it is possible that CPP attempted in the end to settle these disputes using the Prometheus FSRU as a bargaining chip.

Initially, the initiative will be assigned to ETYFA's legal advisors in London and Nicosia. They will immediately attempt to claim from CPP the delivery of Prometheus as soon as possible, as it is legally guaranteed that it is an asset of ETYFA and any retention will be invoked in legal and other steps as retention of foreign property by CPP.

Although the Government considers that the works in Vasilikos were interrupted anyway and it was long known that subcontractors should be sought to complete them, yesterday's development may not help the rapid promotion of Plan B. The Vasilikos projects can proceed with subcontractors, probably under a new agreement, but without the FSRU natural gas cannot be regasified and the new fuel cannot be used in power plants.

Not alone, not in the heat

CPP is a large state-owned company in China and its decision to unilaterally terminate its contract with a state-owned company in Cyprus for a project funded by the EU with €100 million is a major step in the right direction. It seems unlikely that it was received without the knowledge of the Chinese government and its embassy in Nicosia.

And it is out of the question that the decision was taken in the heat of day, as CPP and all stakeholders involved in making or approving the decision know that the Republic of Cyprus will "pursue" the company in all political and judicial forums if the termination of the contract by the Chinese is accompanied by the seizure of ETYFA's vessel, which would be disastrous for Cyprus' economic and energy interests. Without the Prometheus FSRU the terminal in Vasilikos cannot function as planned, even if the pier and onshore works proceed quickly by subcontractors.

It seems that for now the government wants to avoid protests to the Chinese government by opting for legal management of the matter, in the hope of not confirming concerns that yesterday's action by CPP amounts to its final decision to collide head-on with the government, holding the ship hostage and standing firm on the financial claims of hundreds of millions.

ETYFA's response and recourse to the courts

Last night ETYFA issued a statement announcing that it is terminating the contract and denouncing the Chinese Consortium and its members before the competent judicial and other bodies for the Vasilikos terminal.

"Although we made every effort to save the relevant cooperation by providing a variety of alternatives to the Joint Venture in order to enable the completion of the project, the series of violations of essential terms of the Contract by the Chinese Joint Venture as well as their unjustified delays and failures, leave no room for ETYFA anymore rather than terminate this Agreement and denounce the Chinese Joint Venture and its members for these violations before the competent judicial and other bodies."

Unfortunately, our suspicions that this Joint Venture not only does not want but also cannot complete the project it undertook and was paid to execute have been fully confirmed, he notes, adding that it will do everything possible to complete the project as well as compensate for any damage or damage it will suffer.

"We have been following with sadness all these past weeks the systematic tactics of CMC Limited, representatives of the Joint Venture that undertook the Vasilikos project, to distract from their huge responsibilities for the non-completion of the Project. The culmination of their desperate efforts to evade their responsibilities is today's attempt by this company to terminate the relevant Public Contract on behalf of the Joint Venture," the Company adds.