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Chinese-Led Consortium Withdraws From Cyprus Gas Terminal Contract

A view shows oil terminal Kozmino near Nakhodka

A Chinese-led consortium has decided to terminate its contract with Cyprus to construct the country's first natural gas import terminal due to alleged non-payment by the Cypriot government. The CPP-Metron Consortium cited the government's failure to fulfill its financial obligations for work completed this year as the reason for its withdrawal.

The consortium claimed that despite assurances made during a meeting chaired by President Nikos Christodoulides in March, the government did not honor its commitments to make payments. This led to the consortium facing cash flow issues, ultimately resulting in the decision to end the contract.

The project, with a budget of 289 million euros ($319 million), began in July 2020 and was expected to be finished within two years. The European Union had provided a grant of 101 million euros ($110 million) for the terminal, which was intended to reduce power generation costs by 15%-25% and lower Cyprus' carbon footprint by 30% by transitioning to natural gas.

Government failed to fulfill financial obligations, leading to cash flow issues.
CPP-Metron Consortium withdrew due to non-payment by Cypriot government.
Project budget was 289 million euros, with EU grant of 101 million euros.

The terminal, located on the island's southern coast, was a crucial step for Cyprus to shift towards cleaner and more affordable energy sources. It was designed to facilitate the use of natural gas from offshore fields discovered by companies like ExxonMobil, Chevron, Eni, and Total.

However, delays in the project, attributed to issues with Cyprus' Natural Gas Infrastructure Company (ETYFA), led to the consortium's decision to terminate the contract. The consortium accused ETYFA of complicating payments and introducing additional work beyond the contract's scope, such as an unnecessary natural gas export facility.

Despite the termination of the contract, the Cypriot government now has the opportunity to engage new subcontractors to complete the remaining work on the terminal and jetty, potentially finishing the project in as little as 10 months.

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