China Pulls out of Cyprus’ First LNG Import Terminal Under Cash Crunch

China-based CPP-Metron Consortium has pulled out of a contract with the government of Cyprus for the construction of what was to be the island’s first natural gas import terminal, claiming non-payment by the government, the Associated Press reported on Thursday. 

According to the consortium, the government has failed to honor its commitments despite promising to do so in a March meeting chaired by President Nikos Christodoulides.

“No contractor can be expected to work indefinitely on credit,” the consortium said, as cited by AP. “That was not the deal CMC signed up to.”

Whereas the Cyprus government is yet to comment on the matter, an official with deep knowledge of the issue claims that both sides mutually agreed to break the contract with the consortium facing a cash crunch. 

Speaking on condition of anonymity to AP, the official claimed that CPP-Metron underbid competitors to win the contract but soon found itself underwater due to the COVID-19 pandemic and Russia’s 2022 invasion of Ukraine. The consortium’s parent company was unable to finance the cash shortfall, forcing two key project subcontractors to leave, bringing work to a standstill. According to the report, the consortium’s parent company refused to come to its rescue with a cash infusion.  

Billed as Cyprus’ costliest energy project, work on the 289 million euro (~$319 million) terminal kicked off in July 2020 and was scheduled to be completed two years later. The European Union chipped in with a generous 101 million euro (~$110 million) grant. 

The Cypriot government projecting the gas terminal would cut power generation costs by 15%-25% and reduce Cyprus’ carbon footprint by 30%.

By Alex Kimani for Oilprice.com

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