CMC hits back in Vasiliko spat

Chinese-led construction firm CPP-Metron Consortium Ltd (CMC) has hit back at Natural Gas Infrastructure Company (Etyfa) in the latest round of their ongoing spat regarding the under-construction liquefied natural gas (LNG) terminal at Vasiliko.

The consortium said Etyfa had made “huge changes to what it asked CMC to build” and that CMC “has worked hard to meet Etyfa’s demands” and therefore “wonders why Etyfa is still refusing to pay for all the changes”.

This lack of payment for the changes to the plans has led CMC into what they described as an “unsustainable situation”.

Outlining the original plans, they said Etyfa had awarded them with the contract to build the facility in 2019, and that the contract included the construction of a floating storage and re-gasification unit (FSRU) and a jetty connecting it to the shore.

“We have been working hard for years, and despite the Covid-19 pandemic, despite not being paid by Etyfa, have achieved a lot, and apart from Etyfa’s inexplicable refusal to take delivery of the completed FSRU which is ready in Shanghai, another major dispute between the parties now concerns the jetty itself.”

They said the dispute regarding the jetty “has been going on for several years” but that they had refrained from making public statements on the matter and instead wished to find practical solutions.

“However, Etyfa’s continued disengagement from efforts to resolve this issue makes it impossible for CMC to remain silent,” they said.

They reiterated their claim that Etyfa substantially changed what it asked CMC to build.

“Simply put, CMC signed a contract to design, build, and operate one type of project … but Etyfa later insisted that CMC build something fundamentally different.”

The difference, they said, is that the original plan was a facility capable of bringing LNG ashore and converting it to natural gas, but that now, Etyfa wishes to build a facility capable of exporting LNG.

They argued that this would constitute a fundamentally different project from the one to which they signed up.

“A LNG export relies heavily on state-of-the-art cryogenic technology which involves cooling natural gas to extremely low temperatures and turning it to its liquid state,” otherwise known as LNG.

“This process is essential for the efficient and safe export of natural gas over vast distances, but this technology to export LNG brings with it a huge variety of new technical and cost issues.”

This, they said it had a huge impact on the costs for CMC, for which CMC is entitled to be compensated.

“Even though we have worked hard to cover this very different eventuality since it was imposed by Etyfa, many other things will need to be built which will make the export of LNG from these facilities feasible,” they said.

“In fact, we maintain that LNG is far away in the future for Cyprus, if it ever even happens, and despite this, Etyfa insists that the design and construction of the jetty at Vasiliko must be ready for it.”

They argued that for Cyprus to start such a monumental LNG export project, it would be a major financial undertaking and would have costs which could reach several billion euros.

They added that the timeframe to construct such a facility “would likely extend well beyond just six years, underscoring the enormity of the effort.”

Despite the difficulties imposed on CMC by the changes which Etyfa imagined would be easy, the consortium said it did what Etyfa asked, and now the issue is that Etyfa must pay CMC for the huge amount of extra labour and materials.

“Etyfa has so far refused to deal with his problem and has taken the opposite approach,” they said.

“CMC has done its best for Etyfa and the Republic of Cyprus, but the situation for CMC has become serious and unsustainable.”

The row had been brewing on Friday, with Etyfa slamming what it called the “unfortunate and desperate attempt” by CMC to “mislead public opinion” by publishing “untrue claims” about the project.

Only two months ago CMC and the Cypriot government appeared to have put aside a myriad of disputes related to the project and construction was resumed after CMC halted work earlier in the year.

However, the row ignited as CMC said on Thursday that they could no longer stay silent on the issues following numerous press articles by Etyfa and the government about delays to the work.

Etyfa on Friday expressed their “surprise” at CMC’s statement.

“Respecting the relevant confidentiality provisions binding it, Etyfa will not follow the Chinese consortium in its unfortunate and desperate attempt to mislead public opinion about the relevant facts,” Etyfa said.

“We will simply be content to unequivocally reject the claims of the Chinese consortium as completely untrue.”