Vasiliko: Eight interested contractors, but how many can actually complete the project?

Selecting a reliable contractor, allocating risks appropriately and ensuring independent supervision will determine the success of the new tender.The renewed effort to complete the Vasiliko LNG import terminal is entering a critical phase. Eight companies have expressed interest in Etyfa’s (natural gas infrastructure company) tender, estimated at €180 million. DEFA’s (natural gas public company) management has welcomed the response, saying lessons have been learned from the previous failure. The response is encouraging, but does not guarantee success. The real questions are which companies will be shortlisted, how many have the necessary experience, and how many will remain in the competition once they fully understand the technical, financial and legal risks involved. Cyprus cannot afford to repeat the failure of the previous contract. The prequalification criteria Under tender E.013-2026, applicants must demonstrate average annual turnover of at least €300 million over the previous three years. They must also show experience in two natural gas engineering, procurement and construction (EPC) projects during the past decade, including one exceeding €100 million, and two marine projects, including one exceeding €50 million. Compliance with European safety standards is also required. These criteria appear low given the complexity of the project. Excluding the Prometheas FSRU, the project could cost around €300 million, and likely more, yet the reference-project thresholds are only €50–100 million. Furthermore, qualifying gas projects may involve pipelines or other facilities rather than LNG terminals. A reference project can count as completed when at least 80 per cent has been implemented, even without successful commissioning. For consortia, the lead contractor needs independently to satisfy only one of the two principal experience requirements: gas EPC or marine construction. These criteria broaden competition, but do not necessarily ensure that the eventual contractor is suitable for the task. No ordinary construction project The successful contractor will not inherit a clean construction site, complete engineering documentation and new equipment. It will take responsibility for unfinished facilities left by the previous consortium, with substantial technical uncertainties. Technip Energies’ assessment following termination of the earlier contract identified gaps in documentation, concerns about the condition of materials and the need to revisit elements of the design. The new contractor must inspect existing structures, verify equipment, address deterioration, complete documentation and update safety studies. It must also establish compatibility between the onshore facilities, the jetty and Prometheas. All components must be tested, certified and operated safely together. The obligation should be to deliver an integrated, safe and fully functioning LNG terminal, not merely to finish outstanding works. Directly relevant experience and the quality of the proposed project team matter more than company turnover. Who can actually deliver? At least three of the interested companies have substantial international experience in major energy or marine infrastructure projects. Others may also be capable, particularly through well-structured consortia. But formal compliance with the low eligibility requirements is not proof of the ability to rescue a distressed LNG project. Evaluation must examine the proposed team, comparable experience, engineering approach and commissioning record. For meaningful competition, ideally at least three technically credible contractors should remain through the final bidding stage. Otherwise, Etyfa could end up with a sizeable shortlist but very few genuine choices. The next stage is decisive Defa aims to complete prequalification by the end of 2026 and award the contract before summer 2027, with work expected to begin in the second half of 2027. During the next stage, shortlisted contractors receive the detailed technical specifications and contractual terms needed to price the job. Only then will it become clear which are genuinely prepared to undertake the project. Experienced international contractors are unlikely to accept unlimited liability for unknown defects inherited from another company. If Etyfa attempts to transfer excessive, unquantifiable risks, credible bidders may seek contractual protections, include substantial contingencies in their prices or withdraw altogether. That risks fewer bidders, higher costs and disputes. Etyfa must insist on safety, performance and quality, while distinguishing defects that can reasonably be assessed from legacy liabilities that cannot. Clear responsibility for surveys, remedial works, design changes and unforeseen conditions is essential. Transparent evaluation The contract will be awarded using the best price-quality ratio. A cheap but incapable contractor could prove extraordinarily expensive. Yet quality scoring can become subjective unless the criteria and weightings are clear, objective and documented. The detailed balance between technical and financial scores has not yet been made public. Technical capability, specific LNG experience, the proposed personnel, commissioning expertise and the credibility of the completion schedule should carry substantial weight. An unrealistically low bid could later become a succession of claims for additional money and time. The previous failure demands transparent scoring, clarifications and exclusions, not just a low headline price. Who will supervise? Technip Energies was appointed in 2025 to provide project management services and has helped assess the existing facilities and prepare the new tender. However, its precise role in evaluating bids has not been publicly clarified. Nor is it clear whether its remit covers full construction supervision, certification of completed works and commissioning oversight. Etyfa’s Evaluation Committee is responsible for the tender process and reports to the Board. But the contracting authority also needs independent, technically authoritative support throughout this process and contract execution. Following the end of Hill International’s involvement, these responsibilities should be explicitly defined before a new contract is awarded. Costs continue to rise Published estimates suggest approximately €300 million has already been spent without producing an operational terminal. Adding the new tender estimate of €180 million brings the indicative total to €480 million. This is not a reliable final-cost forecast: additional works, financing, Prometheas-related expenses and international arbitration could alter the outcome. On 12 October, Finance Minister Makis Keravnos confirmed that Vasiliko features among the state’s fiscal risks, citing project guarantees and the unresolved arbitration. Meanwhile, the absence of gas continues to burden electricity generation and consumers. When will gas reach EAC? Even if a contract is awarded before summer 2027 and construction proceeds without major problems, the planned building period is two years. Testing, certification, commissioning and the arrangements needed to connect to and supply gas to the Electricity Authority of Cyprus (EAC) must follow. Consequently, gas-fired electricity generation cannot realistically be considered assured before 2030. The decisive milestone is not contract signature, construction completion or even the terminal’s formal handover. It is the reliable delivery of gas to EAC and its actual use in power generation. Cyprus needs the terminal, but not another troubled contract. Success will be measured by the selection of a capable contractor, effective independent supervision, an accountable contracting authority, control of final costs and, above all, when natural gas finally reaches EAC. That is the real lesson from the failure of the previous contract.