In a new statement last night, the CMC consortium, which is largely made up of China’s CPP, accused ETYFA (Natural Gas Infrastructure Company) of making huge changes to what it has asked the consortium to build at the new Vasilikos liquefied natural gas (LNG) pier and that it has worked hard to meet ETYFA’s demands while calling it an unsustainable situation for itself.
It can be inferred from the announcement that the Chinese state-owned company does not intend to continue under the current circumstances with the construction of the Vasilikos pier project.
In its announcement, CMC said that ETYFA awarded CMC the construction of the Vasilikos LNG facility in December 2019 and that this award includes the jetty connecting the FSRU to onshore facilities.
The company claims that it has been working hard for years and that despite the COVID-19 pandemic, and non-payment by ETYFA, it has achieved a lot and adds that “apart from ETYFA’s inexplicable refusal to take delivery of the completed FSRU vessel which is ready in Shanghai, another major dispute between the parties concerns the pier itself”.
According to the developer, although the parties’ disagreement over the pier has been going on for several years, CMC has not made any public statements on this issue and has focused as much as possible on finding practical solutions for the good of the project. “However, the continued disengagement of ETYFA from efforts to resolve this issue makes CMC’s silence impossible,” the announcement adds.
CMC argues that ETYFA has largely changed what it asked CMC to build. “Simply put, CMC signed a contract to design, build, and operate one type of project (importing LNG and converting it to natural gas), but ETYFA later insisted that CMC build something fundamentally different (a facility capable of exporting LNG),” the developer says, noting that “this is a radical departure from the parties’ original agreement for CMC to build an LNG reception and regasification facility.”
It adds that an LNG export facility relies heavily on state-of-the-art “cryogenic” technology that involves cooling natural gas to extremely low temperatures, turning it into liquid known as LNG and that this process is essential for efficient and safe export of natural gas over vast distances.
“But this technology to export LNG brings with it a huge variety of new technical and cost issues and this request by ETYFA has had a colossal impact on CMC’s projects at the pier,” it adds.
CMC further argues that ETYFA demanded not only the “possibility” of adding cryogenic capacity in the future but cryogenic capacity from day one in terms of the design and construction of the pier, which had a huge impact on CMC’s costs for which CMC is entitled to be compensated.
The announcement goes on to say that although the company has worked hard to meet this very different capability from day one “imposed” by ETYFA, many other elements will need to be built which will take many years to enable the export of LNG from the Vasilikos facility. The developer claims that LNG export is a long way off in the future for Cyprus (if it ever happens) and that despite this ETYFA insists that the design and construction of the Vasilikos jetty must be ready for it.
“For Cyprus to embark on such a monumental LNG export project would be a major economic undertaking and would have a cost that could reach several billion euros. The timeframe for such a project would likely extend far beyond just six years, underlining the enormity of the undertaking,” CMC adds.
It is further reported that despite the difficulties imposed on CMC by changes that ETYFA imagined as easy, CMC did what ETYFA asked for and that the issue now is that ETYFA has to pay CMC for the huge amount of extra labor and materials used to implement ETYFA’s new ‘vision’ for the project, i.e. from a gas import project to a much more complex cryogenic extraction project.
CMC finally argues that it is ETYFA that has created this situation with a “dream” of LNG export that (if ever achieved) may take many more years and many more billions of euros to achieve which is not CMC’s concern. “CMC has done its best for ETYFA and the Republic of Cyprus, but the situation for CMC has become serious and unsustainable on CMC’s part,” the statement concludes.liquefied natural gas pier. construction, Vasilikos pier project, disagreement
