Completion of the liquefied natural gas (LNG) terminal in Vasiliko, Cyprus, may face new difficulties. The main risk in the repeated tender process concerns who will be responsible for work already completed and for any defects or unfinished work left by the previous contractor.
Experts doubt that the project can be completed within the estimated budget of €180 million. Additional inspections, equipment replacement, and disagreements over responsibility could lead to higher costs and further delays. The Cyprus Natural Gas Public Company (DEFA) says lessons from the previous tender have been taken into account. However, the final cost of completing the project will only become clear after the technical assessment and receipt of full proposals from bidders.
When will a new contractor be selected?
DEFA Chairman Giorgos Pistentis said the evaluation of the eight applications received has begun. The preliminary selection process is expected to be completed by the end of 2026, while the contract is planned to be signed by summer 2027, possibly earlier. At the first stage, the authorities are reviewing the companies’ qualifications, experience, and financial stability. Technical requirements have not yet been sent to participants, so there are currently no final bids with pricing.
The winner will be selected based on the best value for money. The contractor will have two years to complete the work. The tender is being conducted by ETYFA through Cyprus’s public electronic procurement system. Pistentis said several participants appear capable of taking on the project and expressed satisfaction with the level of interest.
Why experts fear another project setback
Energy expert Charalambos Ellinas believes potential contractors are unlikely to accept responsibility for the quality of work carried out by the previous company without conducting additional inspections. Before construction resumes, they will likely need to carry out a detailed inventory of the site and determine which structures and equipment can still be used. If defects are discovered, the new contractor may demand changes to the contract terms. This would create a risk of higher costs and further delays. Ellinas also believes that only two companies may remain in the final stage after prequalification, which would reduce competition.
Former Cyprus Energy Minister Giorgos Papanastasiou identifies the main issue as the allocation of responsibility for unfinished or defective work. If ETYFA requires the new contractor to assume responsibility for mistakes made by the previous contractor, the company may either withdraw from the process or price the additional risk into its bid. As a result, the cost could rise significantly above €180 million.
There are also other potential complications:
- Equipment and materials. The new contractor may refuse to use components already in storage and instead prefer to purchase new ones.
- Another technical assessment. The contractor may disagree with the inspection results prepared by Technip Energies and commission its own evaluation.
- Additional costs and delays. Structural inspections, equipment replacement, and revisions to technical solutions could increase both the timeline and the final cost of completing the terminal.
Papanastasiou doubts that the currently allocated amount will be sufficient to complete all the required work.
What is known about the Vasiliko LNG terminal project
Construction of the terminal was halted after the contract with the Chinese CPP consortium was terminated on July 18, 2024. The original project called for infrastructure to receive liquefied natural gas, store it, and regasify it. The floating unit Prometheas has already been completed but remains in Malaysia, while the onshore infrastructure in Vasiliko is still unfinished.
Completion of the terminal is strategically important for Cyprus’s energy sector. The project is expected to help diversify fuel supplies and reduce the electricity sector’s dependence on petroleum products. However, the outcome will depend on whether the parties can agree on the technical condition of the site, responsibility for previous work, and the final financial terms of the new contract.