The Chinese consortium ended the contract with criticism towards ETYFA - Blames ETYFA for not receiving Prometheus.

The construction consortium CMC announced today (18/7) the termination of the contract for the construction of the liquefied natural gas (LNG) receiving and regasification terminal in Vasilikos.

“After years of work without proper or timely payments from ETYFA and having made tremendous efforts to find a middle ground with ETYFA, including repeated efforts from senior management and through diplomatic channels to find a mutually acceptable compromise, CMC has no alternative but to terminate its contract with ETYFA for the Vasilikos LNG Receiving and Regasification Terminal Project," the construction consortium stated in a press release, noting that the termination decision is effective today, July 18.

CMC highlighted that ETYFA and the team of consultants hired for this project had little to no relevant experience concerning the essential elements for the implementation of a project of this kind: oil and gas, EPC projects (engineering, procurement, and construction), and the conversion of an LNG carrier to an FSRU (Floating Storage and Regasification Unit).

CMC also mentioned that ETYFA selected a consortium through an international tender process, adhering strictly to the tender procedures. “We hear and read many allegations about how this selection was made. We don't like to comment because we believe these allegations have nothing to do with us as we have strictly followed the tender procedures and the Contract. ETYFA was responsible for any tender evaluation and potential assignment,” it added.

CMC further indicated that ETYFA, by appointing its members within the consortium, awarded the contract to a contractor capable of mobilizing an experienced team of industry experts for the implementation of this critical project for the people of Cyprus. It also criticized ETYFA for requesting CMC from the project's inception "to carry out additional and extracontractual works, unnecessary and/or unsuitable for an import facility, as well as to design and construct an export facility."

“This is clearly work outside the contract and beyond the project's scope, which the EU agreed to fund,” stated CMC, pointing out that it is noteworthy that no one from the Government, even within ETYFA, can justify why an LNG export facility is needed, as there are no LNG production and storage units on the island nor plans to construct them.

“By weaponizing payments and intimidating CMC with unjustified threats – many of which have been repeated by ETYFA and its representatives in the press – ETYFA forced CMC to finance and deliver a project that is fundamentally different, much more complex, and expensive than what the EU funded and CMC signed to deliver,” noted CMC, while also accusing ETYFA of making every effort from February 2021 to July 2022 to withhold all payments, demanding CMC "to accept its unreasonable and extracontractual requests."

CMC continued, mentioning that, as documented in the Special Report of the Audit Service, ETYFA knew since 2021 that its actions and requests for extracontractual works have caused delays and obstacles to the project and have significantly increased costs.

It added that "instead of taking responsibility and collaborating with CMC to find a solution to this problem, ETYFA delayed informing the Cypriot Government for more than a year, and only through CMC's efforts and the presentation to then Minister of Energy Natasa Pilides, was the real situation revealed, while even today ETYFA remains in denial."

CMC also noted that ETYFA failed to cooperate with CMC to receive the floating unit-ship "ETYFA Prometheus."

"ETYFA insisted on the rapid assumption of ownership of ETYFA Prometheus in June 2022 and the ship was certified by Lloyd's Register as ready to sail as early as January 2024. However, since then, ETYFA created obstacles to delay its departure from China and failed to make the necessary arrangements to begin generating significant amounts for the people of Cyprus by putting it into commercial operation in the global energy market either as an LNG carrier or as an FSRU for another project," noted CMC.

"A more productive approach would have been for ETYFA to hire an experienced shipping agent to help take the appropriate measures and prepare the necessary documents. If ETYFA had done this, the FSRU could have sailed in January 2024. Instead, the documents remain pending, even after the direct involvement of the Minister of Energy,” added the consortium.

It also mentioned that after a meeting held in March 2024 with the President and the Minister of Energy, CMC had hopes that the current impasse could be resolved. "Based on promises for a change in ETYFA's behavior, a reassessment of the jetty works by an independent third party, and the rapid issuance of visas for Chinese workers, CMC lifted the suspension due to non-payment and resumed land works in Vasilikos. Unfortunately, ETYFA refused to honor its own Government's commitments," it added.

CMC noted that despite the promises made by the Minister of Energy in March, it has not yet received any payment for its work in 2024, pointing out that this is just the latest failure in a four-year history characterized by illegal withholdings and delayed payments. “No contractor can be expected to work indefinitely on credit. This was not the agreement CMC signed. It was not the agreement the EU agreed to fund,” concluded the consortium.