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Politis reveals today that ETYFA was on the verge of reaching an agreement with the contractor, VPSM Joint Venture, which had taken over the construction of the sea terminal on behalf of the Chinese consortium CPP, to resume works.
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The President of the House Energy Committee requested and received a detailed memorandum about the negotiations for the resumption of the Vasilikos project, which shows that a solution had been found and several legal issues had been resolved to restart the project.
The arrival of natural gas is the number one priority for Cyprus, as it is linked to both reducing electricity production costs and ensuring a stable electricity supply. However, the construction of the natural gas terminal at Vasilikos remains on hold with an unknown completion date. Despite the government's efforts since the termination of the contract with the Chinese consortium in July 2024, the natural gas supply has not come any closer.
The handling of this issue by the Minister of Energy, Giorgos Papathanasiou, has received harsh criticism from all political parties during the closed session of the Parliamentary Energy Committee last Tuesday.
Politis today reveals that ETYFA was close to finalizing an agreement with VPSM Joint Venture, the contractor responsible for the construction of the sea terminal for the Chinese consortium CPP, to resume the project. VPSM has the expertise to complete the work as they had already carried out 50% of it. Ready-made sections of the terminal are stored at the Limassol port, but they were not yet installed.
The government’s initial “Plan B,” after the termination of the contract with the Chinese consortium, was for the project to continue with existing subcontractors, as the EPCOMA agreement allowed for the subcontracting to ETYFA.
Months after the termination of the contract with CPP, ETYFA began negotiations with VPSM to finalize a new agreement for the completion of the terminal, which forms the backbone of the Vasilikos terminal. Although negotiations progressed to the final stage in late July 2025, the agreement was not concluded. ETYFA changed legal advisors, which led to a different interpretation of the contract terms, ultimately causing the negotiations to be terminated.
Following the termination, leaks in the media indicated the presence of defects and failures in the materials, with VPSM allegedly refusing to take responsibility for its completed works. Minister of Energy, Giorgos Papathanasiou, did not deny these leaks and even mentioned a change in direction regarding the issue. However, the technical advisor for the project, Hill International, which had overseen the project for about four years, rejected these claims during the Parliamentary Energy Committee meeting last Tuesday. Hill International confirmed that even the last screw used in the project had been certified and checked.
The President of the Parliamentary Energy Committee requested and received a detailed memorandum on the negotiations for the resumption of work at Vasilikos. The document confirmed that most of the legal hurdles had been cleared, and 95% of the contract terms had been agreed upon, with the cost being aligned with the original terms agreed with the Chinese consortium. If signed in July, the work would have been completed by October 2026.
Key Consideration: Completing the sea terminal would enable the docking of the FSRU "PROMETHEAS" vessel, significantly reducing costs for foreign docking.
During the open session of the Parliamentary Energy Committee, Minister Papathanasiou mentioned that a report from the specialized French company, Technip, is expected regarding the condition of the Vasilikos terminal, which will determine whether the work will continue with the existing infrastructure or with alternative solutions. He also acknowledged past mistakes and urged the Parliament to make timely decisions for the completion of the project.
The contractor for the floating platform, VPSM Joint Venture Limited, in a statement to Politis, denied accusations of not assuming responsibility for the quality of materials. The Chinese consortium also issued a detailed announcement, expressing its willingness to take over the project again and complete it.
What the Subcontractor Says
A member of the VPSM Joint Venture Limited Board, Pavlos Fokas, provided a detailed response regarding the current state of the terminal's infrastructure during the negotiations with ETYFA. He clarified that during the negotiations, VPSM accepted responsibility for the completed works and agreed to take responsibility for any potential damages caused by inactivity.
VPSM also agreed to take responsibility for the design of certain works that had not yet been approved or executed and outlined its responsibilities concerning the materials already delivered to ETYFA by the previous contractor.
"VPSM has always been willing to contribute to the resumption and completion of the project as soon as possible, and any delays or failure to reach a final agreement were not due to us," Mr. Fokas emphasized.
Next Steps
Based on Politis’ reporting and statements made during the closed session of the House Energy Committee, it appears that a solution to continue the work was available immediately after the termination of the contract with the Chinese consortium. The contract was officially terminated in July 2024, but the work had practically stopped in January of the same year.
According to the memorandum presented to the House Energy Committee, ETYFA invited VPSM for direct negotiations on March 31, 2025, to agree on terms to continue the project. Despite progress in negotiations, including preparatory actions by VPSM, the negotiations were terminated by ETYFA in a letter dated July 30.
Had ETYFA maintained its original position, the project would have already resumed, with an approved timeline and budget in place.
The future of the project now hinges on the "gap analysis" of the project’s design, which is being conducted by ETYFA’s new technical advisor, Technip. The "gap analysis" is expected to be completed by September and will identify the remaining design elements needed to complete the project, after which Technip will submit proposals for the next steps.
Papathanasiou on Technip’s Study
Minister of Energy Giorgos Papathanasiou, when asked by Politis to comment on the findings of the article regarding the quality of materials and VPSM’s responsibility, responded that, "If these issues are confirmed, I am confident that they will be addressed by the due diligence investigation conducted by the project’s technical consultant."