Cyprus in talks with energy companies over unallocated EEZ gas blocks

Nicosia, Cyprus. The government is in talks with energy companies over allocating rights to explore and drill for natural gas in unreserved blocks of Cyprus’ exclusive economic zone, President Nikos Christodoulides said on Friday.

He said the planned development could support an alternative energy corridor for Europe through cooperation with Egypt, Israel, the Republic of Cyprus and possibly other countries in the region.

Energy security plans

Christodoulides said Europe’s energy security and the energy security of European Union member states are matters of the highest priority.

He said alternative energy sources have become more important since Russia’s invasion of Ukraine and European efforts to reduce reliance on Russian gas.

The government is working on a specific plan and design, he said, including efforts to complete the arrival of natural gas at the planned natural gas liquefaction terminal in Vasiliko.

“This is something that is very important. The tenders have been issued. The process is progressing,” he said.

Vasiliko project disputes

Efforts to build the Vasiliko terminal have been stalled for more than two years. In July 2024, the China Petroleum Pipeline Engineering Co consortium and Metron Energy Applications SA, which formed the CPP-Metron Consortium, terminated their construction contract with the government.

The consortium accused public natural gas infrastructure company Etyfa of bullying and of leaving it to work without proper or timely payments for years. A floating storage and regasification unit intended for use in Cyprus remained moored in Malaysia without certification.

The vessel was a key point of dispute between Etyfa and the consortium. The consortium said the unit was ready in Shanghai and that Etyfa had inexplicably refused to take delivery, while also frequently failing to meet payment deadlines.

European Commission concerns

Also in July 2024, the European Commission requested that the Republic of Cyprus repay almost €69 million in grants paid for the terminal.

The energy ministry received a letter from the Commission listing possible irregularities that occurred during the tender evaluation period for the construction project.