Energy minister plays down LNG delays

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Energy Minister Natasa Pilides has assuaged stakeholders’ and MPs’ concerns over serious delays in constructing a liquefied natural gas (LNG) terminal.

The project, which has seen its cost rise from €290 mln to €315 mln after the consortium claimed compensation over delays due to the COVID pandemic, is considered the largest energy venture in Cyprus.

It is expected to be completed by July 2023; however, MPs have some doubts.

Answering a ruling DISY MP on whether the project is on track, Pilides said: “Work on the construction of a jetty for importing LNG for electricity generation in Cyprus will begin next week”.

Replying to DISY MP and chair of the House’s Energy Committee, Kyriacos Hadjiyiannis, Pilides conceded the project had been derailed from that timeframe but strived to assure it is nearing completion.

Pilides said the Cyprus Joint Rescue Coordination Centre issued a navigational telex (Navtex) notifying mariners that work in the Vassiliko area is expected to begin on January 16.

According to the Navtex, barges and tugboats will begin marine operations to construct the jetty in the context of the LNG terminal.

Regarding work on the floating storage and regasification unit (FSRU), Pilides explained that the vessel bought is currently being converted at a Shanghai shipyard.

Concerning the land and sea construction, Pilides notes that the contractor completed the preliminary work after establishing the construction site.

“To date, the offices have been installed and are fully functional, the earthworks are being completed, and the pilings and mechanical constructions of the pier are expected to start in the next period”, Pilides said.

Regarding the floating unit, that is, the conversion of the LNG Carrier into a floating natural gas storage and regasification unit, “it is in the process of being converted at the shipyard in Shanghai”.

“At the same time, relevant units for liquifying the natural gas on board the FSRU are being built in a separate shipyard “.

The minister did not clearly answer when the FSRU and the other units would be ready.

The same thing applied to the jetty as the minister sufficed to place its completion “in the coming period”.

Pilides has conceded that work has yet to start on the construction of the jetty, which will naturally be time-consuming, but neither on the other infrastructure for the transfer of the regasified natural gas from the floating unit (FSRU) to the adjacent power station EAC.

Destroyed timeline

The initial contractual timeline for the completion of the project was September 2020, but the COVID-19 pandemic destroyed the timeframe.

The government had hoped to see the LNG terminal completed by early 2022.

More delays saw the completion date subsequently pushed to July this year.

Pilides told MPs the consortium submitted a revised schedule that presents a nine-month delay as demands for compensation due to the ongoing impact of COVID-19 throughout the supply chain.

She avoided answering whether the project would be completed by then.

A request for €25 mln compensation for increased raw materials and equipment costs was met, but other demands are disputed.

Nicosia signed a landmark deal to build a €290 mln terminal to import LNG for electricity generation in December 2019 with the multinational consortium led by China Petroleum Pipeline Engineering.

The consortium is led by China Petroleum Pipeline Engineering and includes Metron SA, Hudong-Zhonghua Shipbuilding and Wilhelmsen Ship Management following a tender.

It features an LNG FSRU unit, a jetty, mooring facilities, a pipeline, and other onshore and offshore-related infrastructure.

The project will generate benefits worth €1.5 bln a year for the Republic of Cyprus.

According to the terms of the tender, the consortium had to complete all the infrastructure 24 months from the date of commencement of the project work.