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What is going on with Cyprus LNG?

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Following a hard-hitting article in Phileleftheros on 5 January calling the project a ‘fiasco’, we had a flurry of announcements from the Ministry of Energy during the last few days.

The good news is that construction of the jetty at Vasilikos is to start on 16 January, following long delays – the contracted project completion date was early October 2022.

But the big question remains unanswered: When will the project be completed, and when will LNG imports commence?

Will the project be delayed well beyond 2023?

Responding to questions earlier in the week, the Minister of Energy avoided giving straight answers.

Instead, she repeated that the contractor issued a revised timetable a year ago indicating completion in July 2023.

Still, she avoided confirming this is achievable or will be adhered to.

Clearly, July 2023 is not achievable even if jetty construction activities commence on 16 January.

EAC does not know the answer either.

Asked on Sigma’s ‘Mesimeri kai kati’ programme on 10 January whether EAC has been advised to start preparing for accepting gas in July after evasive answers, its spokeswoman finally admitted that the answer is no.

She also said that this is the responsibility of DEFA and the Ministry of Energy. The answers are astonishing, given that EAC is a major shareholder in the project.

It sunk €43 million into it.

Surely as a shareholder, EAC is fully advised of progress.

If not, then there is something fundamentally wrong here.

EAC is not just a spectator on the sidelines of this ‘fiasco’.

As a shareholder and the main customer of DEFA for this gas, it should know. So it should make sure it is fully informed.

The Ministry of Energy is not giving us straight answers, even though, as the sole shareholder of DEFA, it surely is fully informed and hides behind the contractual line issued by the contractor a year ago.

A timetable that is no longer achievable.

Instead, we have a lack of transparency about the biggest energy project on the island, with major implications for electricity generation, emissions, prices, etc.

Given its far-reaching implications, there is an obligation to keep energy consumers informed on its progress.

We must know.

We should not be faced with surprises in July when, relying on the contractor’s revised timetable confirmed by the Ministry, the gas should flow to EAC, replacing diesel for good.

With the EU applying an embargo on Russian oil products on 5 February, including diesel, prices will go up again, and electricity produced by burning diesel will become much more expensive.

Any delay in gas deliveries beyond July will cost the Cypriot energy consumer dearly.

And this is additional to the cost of emissions that the use of gas is supposed to reduce.

This project has the makings of a major scandal.

I warned about the problems in 2019 and subsequently.

And not only about the highly questionable and irregular tender evaluation process and the project award based on a single commercial offer but also the lack of LNG experience of the main contractor, China Petroleum Pipeline Engineering Co Ltd.

The Auditor General’s concerns about this questionable process were articulated in great detail in December 2019 but to no avail.

We are now witnessing its consequences.

Unfortunately, we still lack transparency, clouded in evasion, with nobody taking responsibility for its progress…or lack thereof.

We still need to know the answer: When will the project be completed, and when will LNG imports commence?

Dr Charles Ellinas @CharlesEllinas

Senior Fellow Global Energy Center Atlantic Council