Cypriot taxpayers are currently incurring an estimated annual expense of €350 million, a substantial financial burden stemming directly from the prolonged delays and subsequent abandonment of a vital liquefied natural gas (LNG) import terminal project. This significant economic drain is primarily a consequence of the nation's continued dependence on diesel for electricity generation, which mandates the purchase of expensive greenhouse gas emission allowances. These revelations emerged during recent parliamentary inquiries, starkly illustrating the considerable repercussions of the project's faltering progress.
The ambitious LNG terminal, intended for Vasiliko, has encountered persistent difficulties since a Chinese-led consortium unexpectedly withdrew from negotiations earlier this year. This abrupt departure has plunged the project into uncertainty, with essential infrastructure, including a crucial jetty, remaining only partially constructed. Consequently, the state-owned natural gas company, Defa, has been compelled to initiate a new tendering process for subcontractors, indicating a renewed, albeit delayed, commitment to completing the remaining construction phases.
Adding further complexity, the Prometheas floating storage and regasification unit (FSRU) is now technically operational. Giorgos Ashikalis, the head of Defa, confirmed that the vessel has undergone the installation of necessary components, including missing valves and a nitrogen unit, at a cost approaching €1 million. However, the Prometheas remains geographically stranded, its inability to dock in Cyprus being a direct result of the unfinished Vasiliko jetty, thereby preventing its immediate deployment.
In response to these substantial impediments, the government is reportedly evaluating a variety of strategic alternatives for the Prometheas. These options are understood to include transferring the FSRU to another jurisdiction for certification, a step that might facilitate its eventual utilization, or exploring potential leasing agreements. Nevertheless, any prospective leasing arrangement is contingent upon obtaining approval from the European Commission, a significant co-financier of the project, highlighting the intricate international dependencies involved.
The financial ramifications of this stalled venture are profoundly concerning. The €350 million annual figure represents the cost of greenhouse gas emission allowances necessitated by ongoing reliance on fossil fuels like diesel for electricity generation, as opposed to the cleaner alternative of LNG. This persistent dependence not only incurs substantial financial penalties but also hinders Cyprus's progress towards its climate objectives and the broader European energy transition. Parliamentarians have voiced considerable apprehension regarding the extended delays and mounting financial penalties. The situation with the Prometheas vessel further compounds the predicament, as its technical readiness contrasts sharply with its current inoperability due to infrastructure deficits. The government's deliberations on the FSRU's future underscore the pervasive uncertainty surrounding the project and the substantial investment facing an indeterminate outcome.