New information from Phileleftheros suggests that the Cypriot Government and the Chinese state-owned company CPP have fully embraced the idea of a velvet divorce and give the impression that they are working harmoniously towards this direction.
Financial Demands and Negotiations
To reach some sort of resolution regarding the remaining works for the terminal at Vasilikos, the Floating Storage and Regasification Unit (FSRU) must be delivered to its owner, namely the state-owned ETYFA. Previous information from Phileleftheros confirmed that the Chinese side has made financial demands for the delivery of the vessel. The exact amount requested by CPP has not been confirmed, but it concerns tens of millions of euros, in addition to the approximately 190-200 million already spent by ETYFA for the conversion of the vessel – from the Galea carrier to the Prometheus FSRU.
The Cypriot side does not consider the company’s new demands valid. On the other hand, rejecting the claims at this stage may jeopardize ETYFA’s acquisition of the vessel. Intensive consultations are expected in the coming days to find a compromise, exclusively for the FSRU.
CPP does not seem to accept the option of waiting for the arbitrator’s decision in London on all aspects of the dispute, delivering the vessel to ETYFA beforehand. The Cypriot company, on its part, refuses to pay what CPP claims unless there is a decision by the arbitrator.
Legal Advisors and Settlement
What the legal advisors of the two companies will seek is a settlement that will take into account the Chinese economic claims (for the vessel only), but also ETYFA’s desire for any final financial burden, beyond the provisions of the initial contract, to be based on the arbitrator’s decision and not on bilateral negotiations.
Once a settlement for the vessel is reached, the rest seems to be… easier now. As we have previously mentioned, neither CPP wishes to return to the Vasilikos site and resume work on the jetty, nor does ETYFA want to relive the adventure of stitching – unstitching with the people of the Chinese company.
Therefore, what should be expected is an agreement for the dissolution of cooperation regarding the projects in Vasilikos, presupposing, we reiterate, that an agreement will be reached for the delivery of the vessel to Cypriot hands. In the event of a divorce, the financial differences between the two sides (claiming millions from each other) will be left to be resolved through arbitration. Therefore, the continuation and completion of arbitration in London becomes particularly important for all parties.
Furthermore, ETYFA will seek another contractor to complete the jetty as well as the other projects on land, so that the terminal – with the addition of the FSRU – can operate at some point.
