Cyprus forges ahead with natural gas exploration, eyes European energy corridor role
"President Nikos Christodoulides announced ongoing talks with major energy firms to allocate exploration rights in untapped EEZ blocks, even as the government pushes forward with the troubled Vasiliko LNG terminal—plagued by multi-year delays, a terminated contract with the CMC consortium, an uncertified FSRU in Malaysia, and a €69 million EU grant repayment demand—while existing licenses across key offshore blocks remain divided among international giants like Eni, Total, Chevron, and NewMed."
EU Directive 2019/790 Article 15 Attribution • Verified Energy Document
President Nikos Christodoulides announced on Friday that the Cypriot government is actively engaged in discussions with major energy companies regarding the allocation of exploration and drilling rights for natural gas in untapped blocks within Cyprus' exclusive economic zone (EEZ).
The president highlighted these talks as crucial for establishing the eastern Mediterranean as an alternative energy corridor for Europe, fostering cooperation with nations such as Egypt and Israel. Christodoulides underscored Europe's energy security as a top priority, a focus that has intensified following Russia's invasion of Ukraine and the subsequent European drive to reduce reliance on Russian gas.
He also confirmed that the Cypriot government is developing a "specific plan and design" to facilitate the arrival of natural gas at the planned liquefaction terminal in Vasiliko, noting that tenders have been issued and the process is advancing.
However, the Vasiliko LNG terminal project has faced significant delays, stalling for over two years. The China Petroleum Pipeline Engineering Co consortium and Metron Energy Applications SA, operating as the CPP-Metron Consortium (CMC), terminated their construction contract with the government in July 2024. CMC publicly accused the state natural gas infrastructure company Etyfa of "bullying" and withholding timely payments.
Further complicating matters, a floating storage and regasification unit (FSRU) intended for the project remains uncertified and moored in Malaysia. CMC had previously asserted the vessel's readiness in Shanghai, alleging Etyfa's "inexplicable refusal" to take delivery and frequent missed payments.
Adding to the project's woes, the European Commission, also in July 2024, demanded the Republic of Cyprus repay almost €69 million in grants provided for the terminal. This demand followed a letter to the energy ministry detailing "possible irregularities" in the tender evaluation for the construction project. The original contract for the LNG project was signed in December 2019, with an expected completion time of 22 months.
Currently, Italian energy company Eni and France’s Total jointly hold rights to Blocks 6, 7, 8, and 11 in Cyprus’ EEZ. Block 12 is co-owned by Hungarian firm MOL, American multinational corporation Chevron, and Israeli energy company NewMed Energy. Conversely, licenses for Blocks 2, 3, and 9, previously held by Eni and Korean energy company Kogas, expired last year without renewal. Former energy minister George Papanastasiou confirmed that surveys and exploration in Blocks 2 and 9 yielded no promising indications of natural gas reserves.