China Petroleum Pipeline Engineering (CPP) reportedly seeks a financial settlement and termination of its involvement in the Vasilikos LNG terminal project, according to unconfirmed information obtained by Phileleftheros.
The report suggests CPP prioritises a financial agreement with Cyprus, followed by a project exit. Additionally, CPP may now link the settlement to the delivery of the Floating Storage and Regasification Unit (FSRU) vessel.
Concerns arise if CPP withholds the FSRU, potentially undermining previous assurances regarding the vessel’s readiness and certification. Phileleftheros reports ETYFA (Natural Gas Infrastructure Company) has already paid CPP €200 million for the vessel, named “Prometheus.”
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.
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 prioritise 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.
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