The road to completing the Vasilikos projects is fraught with obstacles

tomarasa@kathimerini.com.cy

Eight companies have expressed interest in taking over and completing the unfinished natural gas terminal at Vasilikos, bringing new momentum to the ambitious energy project of the Republic of Cyprus two and a half years after the collapse of the agreement with Chinese consortium CPP-METRON. Experts in major energy projects believe the list of contenders includes companies with the technical expertise and experience needed to complete a terminal of this scale. The interest is undoubtedly a positive development, but ETYFA, the terminal's owner, still faces a long and difficult road ahead, according to industry figures in the energy construction sector. They say ETYFA must carefully assess the criteria it uses to award the contract to avoid repeating the mistakes that have already plagued the project. Two key questions remain unanswered: What will ETYFA require of the interested companies, and will it continue to follow the outdated practice of awarding contracts primarily to the lowest bidder? That approach played a major role in the decision to award the original contract to the Chinese consortium.

The mistakes

People closely following the Vasilikos project say the first priority must be to ensure that the company or companies selected for the final round have the technical expertise and experience to finish the work left incomplete by CPP-METRON. According to available figures, the project is 60% complete in terms of onshore infrastructure and 40% complete in terms of the jetty. ETYFA must avoid repeating its earlier mistake with the Chinese consortium, when an experienced construction company withdrew and the Chinese were allowed to continue without a construction firm. Industry estimates suggest that some of the companies interested in taking over the terminal have experience in major construction projects.

The obstacles

Almost two and a half years have passed since work stopped. ETYFA aims to complete the bid evaluation process and award the contract by June 2027. To ensure that the project is finally completed and the terminal becomes operational, the organization will have to overcome several challenges. Drawing on its experience with the Chinese consortium and other major public-sector projects, ETYFA must first confront its own longstanding approach to procurement, which places low cost above other criteria when evaluating bids. This practice has left behind defective projects and inflated completion costs. Industry estimates suggest that ETYFA will find it difficult to break away from the conventional approach governing public contracts. If the same mistakes are repeated, the project could end up in the hands of a contractor without the technical expertise or experience needed to finish the work.

The issue of liability

One of the main challenges in finding a new contractor concerns responsibility for the project. This includes not only the remaining work but also the work already completed by the previous consortium. According to reports, ETYFA wants the new contractor to assume full responsibility for the entire project. However, ETYFA may struggle to persuade a serious and reliable company to accept those terms, particularly given reports that the Chinese purchased and used materials with questionable certification. Public statements have indicated that these materials could affect the project's operational safety. Even if this obstacle is overcome and the new contractor agrees to assume full responsibility for all the work, technical experts expect the project's final cost to rise sharply.

Design

Another issue ETYFA may have to address is the project's original design, particularly the jetty and whether it should retain its planned cryogenic configuration. The design would allow the terminal to receive natural gas for the domestic market and electricity generation, while also liquefying natural gas from Cypriot deposits for export as LNG. Experts believe that if ETYFA insists on retaining the jetty's original design, the cost of completing the terminal will increase and further delays will follow.

The Chinese

The Chinese consortium CPP-METRON represents a third potential obstacle to restarting work at Vasilikos. Although one Chinese company appears on the list of eight interested bidders, the previous contractor could still take legal action against ETYFA in an attempt to block the resumption of work. The potential legal challenge is linked to arbitration proceedings in London, where the Chinese consortium is seeking approximately €200 million from the Republic of Cyprus.

The terminal is targeted to begin operating by 2030

The obstacles and the timetable for awarding the contract to a new, reliable contractor are also shaped by the findings in a report prepared by Technip Energies, ETYFA's consultant. If the new contractor follows the French company's recommendations, the contract could be awarded by next June. The remaining work could then be completed within two years at the latest. Under this best-case scenario, the Vasilikos terminal could begin operating in late 2029 or early 2030.

The eight contenders for the terminal

• AVAX S.A. (Greece)

• The Petroleum Projects and Technical Consultations Company, Petrojet (Egypt)

• China Harbour Engineering Company Ltd., with the participation of Cyfield (China)

• Terna S.A. (Greece)

• ECOnnect Energy (Norway)

• Saipem S.p.A. (Italy)

• Baran International Ltd. (Israel)

• Archirodon Construction (Overseas) Company Limited (Netherlands)