Turmoil at Vasilikos as Chinese consortium pulls out, terminal project in limbo

The sudden withdrawal of the CPP-METRON CONSORTIUM LTD from the Vasilikos terminal project has added a new layer of complexity to the already troubled initiative. The consortium’s exit, which came amid advanced-stage consultations, has sparked conflict and highlighted ongoing disputes that have delayed the project's progress.

The departure of the Chinese consortium ends a period marked by frequent public disagreements, which have significantly impacted the project's timeline and hindered the introduction of photovoltaic (PV) power generation. Government sources, who spoke on condition of anonymity, expressed relief, suggesting that the consortium's withdrawal could ultimately benefit the project. They noted that it could clear the path for the completion of terminal projects that have already been funded, including the FSRU ship "PROMETHEAS," currently in Shanghai.

Next Steps for the Project

Under the terms of the project contract, the Chinese consortium is required to hand over the project to ETYFA, the terminal's owner. This handover will involve formal processes and the transfer of project assets. In the wake of the consortium’s withdrawal, ETYFA plans to use subcontractors previously engaged by the Chinese. These subcontractors include Cosco Shipping, Greek company Spanopoulos, and Wilhelmsen, all of whom are expected to have the expertise to complete the remaining work.

Ship Ownership and Conversion

Although the Republic of Cyprus has paid nearly €200 million for the conversion of the "PROMETHEAS" into a floating unit, it does not yet hold ownership. The contract stipulates that all project assets, including the ship, should be transferred to ETYFA. The ship can be sailed from Shanghai, with any final certifications to be completed in Vasilikos.

Financial Guarantees and Penalties

The project was protected by three guarantees totaling €82 million and subject to penalties amounting to €62 million for breaches. With the consortium’s withdrawal, ETYFA is set to collect these guarantees and pursue the penalties. The Chinese consortium had attempted to avoid these penalties by pressuring the Cypriot side, but ETYFA is poised to enforce these financial terms.

Ongoing Arbitration

The withdrawal also affects an ongoing arbitration case in London, where the Chinese consortium has sought €200 million in additional claims. The consortium requested the termination of these proceedings, but Nicosia has rejected this request. The Cypriot side believes it has strong evidence to counter the Chinese claims and prove the consortium's responsibility for the project's issues.

As ETYFA moves forward with completing the project, the focus will be on resolving these financial and legal disputes while ensuring that the terminal and associated infrastructure are delivered as planned.

[This article was translated from its Greek original]