Cyprus-China Relations Strained Over Vasilikos Gas Terminal Dispute
The ambitious endeavor to construct a gas regasification terminal in Vasilikos has hit a critical snag, with the Chinese state-owned company CPP demanding additional financial compensation of EUR 200 million. This development has placed a significant strain on Cyprus-China relations, prompting President Christodoulides to summon the Chinese Ambassador for a crucial meeting at the Presidential Palace.
CPP’s reluctance to proceed with the Vasilikos project, essential for docking the Prometheus floating gas storage and regasification unit, has led to an impasse. The company’s recent statement highlights its stance that the current conditions are untenable, and without meeting its financial demands, the project cannot move forward.
The Republic of Cyprus, supported by its legal and technical advisors, finds CPP’s claims excessive and unacceptable. The dispute has escalated to the Court of Arbitration in London, where CPP seeks an additional EUR 200 million from the Cypriot government. The contention revolves around ETYFA’s alleged lack of cooperation and new requirements for cryogenic technology, which would enable both import and export of natural gas.
The Cypriot side maintains that the original contract, signed in 2019, accounted for the installation of such technology only under specific future prospects. Accusations of bad faith, misunderstanding of contract terms, or financial incapacity have been leveled against CPP by the Ministry of Energy, DEFA, and ETYFA.
With the potential collapse of the partnership with CPP looming, the Cypriot government is sounding the alarm. The delay in introducing natural gas threatens to increase electricity costs and greenhouse gas purchase expenses for consumers. The EU-funded project, closely monitored by the Commission, has already seen more than EUR 300 million invested without yielding any gas supply.
Complications also arise from the Prometheus floating gas regasification unit (FSRU), which remains docked in Shanghai. Cyprus has paid approximately €200 million for its construction, but it cannot be delivered due to pending berthing modifications required by Lloyd’s Register.
The stalemate not only jeopardizes the Vasilikos project but also casts a shadow over previous administrative decisions and the role of the Chinese government in CPP’s management. The situation underscores the delicate balance of international partnerships and the high stakes involved in large-scale infrastructure projects.
