China Petroleum Pipeline Engineering (CPP) is reportedly seeking a financial settlement and termination of its involvement in the Vasilikos LNG terminal project in Cyprus, according to unconfirmed information obtained by Phileleftheros. The report suggests that CPP prioritizes a financial agreement with Cyprus, followed by a project exit.
Concerns Over FSRU Delivery
Additionally, CPP may link the settlement to the delivery of the Floating Storage and Regasification Unit (FSRU) vessel named “Prometheus.” There are concerns that CPP withholding the FSRU could undermine previous assurances about the vessel’s readiness and certification. Phileleftheros reports that ETYFA (Natural Gas Infrastructure Company) has already paid CPP €200 million for the vessel.
Technical interventions are reportedly required for the FSRU to be certified as an LNG Carrier and sail to Cyprus. Further modifications, estimated at €10-15 million, would be necessary for its operation as an FSRU in Vasilikos.
Financial Demands and Arbitration
The extent of CPP’s additional financial demands for the FSRU and jetty works remains unclear. In a separate London arbitration initiated by CPP, the company reportedly requested an additional €200 million. Recent communication from CPP suggests a shift from arbitration to a mediated settlement in Dubai.
The report concludes that CPP may prioritize a significant financial settlement exceeding its claimed project expenses, followed by complete project withdrawal. A demand for additional payment to deliver the FSRU could escalate the situation into a potential “hostage situation” involving the vessel, according to Phileleftheros.
