The government is engaged in “damage limitation” following reports of “serious safety issues” regarding the construction of a liquefied natural gas terminal at Vasiliko, Energy Minister George Papanastasiou said on Saturday.

His comments come after television channel Omega had reported on Friday that there were “design and materials issues” with the project.

“There are very serious technical issues, which make it impossible to continue the work at this time. That is why the work on the pier has been at a standstill for months and no timetable has been given by the authorities for the completion of the work,” Omega quoted a “competent source” as having said.

It added that the project coordinator is “preparing a comprehensive report” which will be delivered to natural gas infrastructure company Etyfa or to Papanastasiou in the early part of next month.

Pursuant to this, it said, Papanastasiou will “make the final decisions on the next steps”, with “any corrective measures” set to “entail the disbursement of many millions of euros and a huge cost for the taxpayer”.

On this matter, it said there has been “intense concern” inside the energy ministry, “which has inherited the problems of the past and wants to proceed immediately with the completion of the terminal at Vasiliko”.

However, it said, if the report “demonstrates that it is not possible to continue as it is”, Papanastasiou “should take the necessary steps” and seek out those responsible for the problems.

In response on Saturday, Papanastasiou confirmed that the report will be completed “soon”, and that blame for the problems experienced at Vasiliko “will be attributed”.

Papanastasiou had said at the end of last year that the government’s goal was for the construction of the LNG terminal at Vasiliko to be complete by the end of this year, though the issues raised this week appear to constitute another setback for a project which has faced numerous issues in recent years.

Work had ground to a halt last year after the CPP-Metron Consortium (CMC) tore up its contract with the government to construct the terminal.

CMC had accused Etyfa of “bullying” and of leaving them to work “without proper or timely payments” for years.

They added Etyfa and its advisers on the project “had little to no relevant experience in any of the essential components for delivering a project of this nature: oil and gas, engineering, procurement and construction works and conversion of an LNG carrier to a floating storage regasification unit.”

“The position has become untenable. Contrary to the promises that were made by the [energy] minister in March, CMC has still not received any payment whatsoever for its work in 2024.

“That is but the latest failure in a four-year history characterised by wrongful withholdings and delayed payments. No contractor can be expected to work indefinitely on credit. That was not the deal that CMC signed up to. It was not the deal that the EU agreed to fund,” they said.

The FSRU had been one of the key points of contention between Etyfa and CMC, with CMC insisting that the vessel was ready in Shanghai and that Etyfa had “inexplicably refused to take delivery” of it while also frequently not meeting payment deadlines.

It is now in Malaysia, with Papanastasiou saying on Saturday that it is “undergoing the changes needed to install the systems which were missing for it to be considered an FSRU”.

Another setback had come in July last year when the European Commission demanded that Cyprus repay almost €69 million which had been paid in grants for the terminal.

The energy ministry received a letter from the European Commission which listed “possible irregularities which occurred during the evaluation period of the tender” for the construction project.

The commission’s letter, according to the ministry, “alleges two substantive violations”, the first being the criteria for awarding the tender [to CMC] in December 2019 and the second being the signing of the bilateral agreement upon approval of an additional €25m in funding in June 2022.

The European public prosecutor’s office (EPPO) had earlier in the same month publicly announced the opening of an investigation into possible procurement fraud, misappropriation of EU funds and corruption related to the Vasiliko LNG terminal.

Cyprus signed the contract for the LNG project in December 2019. The entire project should have taken 22 months to complete.