The government expects the LNG import terminal at Vasiliko to be up and running by 2030, Energy Minister Michalis Damianos said on Monday.

Taking questions from MPs after presenting the ministry’s budget for 2027, Damianos called the LNG project “a priority” for the government, insisting that it would be finished.

The objective is to award the tender for pending works before the summer of 2027, so that work can begin during the second half of the year.

The government expects that imported natural gas will start being used for electricity generation by 2030, the minister added.

He linked the completion of the LNG terminal to energy adequacy as well as the need to reduce Cyprus’ purchase of greenhouse gas emissions allowances.

The contract for the LNG project had been awarded in December 2019, but actual work did not start until a year later. The terminal should have been finished by July 2022.

There followed four delivery timetables, all missed – September 2022, July 2023, October 2023 and lastly July 2024. In that same month, the Chinese contractor pulled out, citing irreconcilable differences with Cypriot authorities.

The government is now looking for contractors to finish pending works.

Akel MP Andreas Pashiourtidis demanded a status update on the Prometheas vessel – the floating, storage and re-gasification unit that is an integral component of the LNG project.

The ship is still moored in Malaysia.

Regarding Cyprus’ offshore natural gas reserves, Damianos said that as things stand these would be used for commercial purposes via exports – rather than for domestic consumption.

Turning to energy adequacy and the stability of the electricity grid, the minister said that during 2027 the government plans to install 120MW of storage capacity.

Further developing renewable energy sources requires additional storage systems, so as to minimise cuts to PVs.

On the high energy costs, Damianos noted that the government has introduced various tax discounts, while potential additional tax reductions are being discussed at the EU level.

He said that €100 million has been earmarked for energy upgrade projects for the 2026 to 2032 period. These funds would be targeted at vulnerable households.

About 75 per cent of this would be covered by the EU’s Social Climate Fund, the rest from Cypriot resources.

The energy ministry’s budget for 2027 comes to €83.8 million – a 42 per cent drop from 2026.

Damianos explained that the steep reduction is chiefly due to changes in project financing via the Recovery and Resilience Facility, as well as the fact that the 2026 budget featured supplementary appropriations.

Energy Minister Michael Damianos on Monday stressed the Cyprus government putting money forward for the construction of the Great Sea Interconnector is conditional on there being progress made in its construction, saying that “if electricity does not come to Cyprus, we will not pay”.

He confirmed after presenting his ministry’s budget for next year to the House finance committee that Greece’s independent power transmission system operator (Admie) has claimed that its expenses on the project have risen to €302 million.

This figure is up from the €250m his predecessor George Papanastasiou had confirmed in August last year.

However, Damianos said, the proportion of those expenses verified by the Cyprus energy regulatory authority (Cera) stands at €82m, the same figure announced almost 15 months ago.

In effect, the Cypriot authority has refused to verify that any money has been spent on the interconnector project since August last year, despite Admie having reported that it spent €52m in that time.

He also made reference to the €25m the Cyprus government had pledged to pay Admie each year from 2025 until 2029, to ensure the financial viability of Admie, which was at the time of the agreement the project’s outright owner, before it sold a majority stake to French asset management firm Meridiam.

On this front, he said that the first payment, due in 2025, was “postponed” as “no work progressed during that year”.

“The commitment concerns a project which is progressing and not a project which remains pending,” he said.

Cypriot billpayers will repay interconnector cost over 30 years

He also stressed that Cypriot consumers will only begin paying for the project following its completion and when Cyprus is receiving energy via the interconnector cable from Greece, adding that “the share attributable to Cypriot consumers is planned to be repaid over a period of 30 years”.

Regarding the possibility of the cost of constructing the interconnector increasing, he said that “additional resources should be sought, possibly from investors, funds, or through financing from the European Investment Bank”.

He later described the interconnector project, which, if completed, will link the energy grids of Cyprus, Greece and Israel, as “important both for electricity adequacy and for geopolitical reasons”, though he did acknowledge the “risks” associated with its construction.

On this front, he said that he believes that “Turkey will react” to the construction of the cable between Cyprus and Crete, given that a part of the planned route passes through waters which Turkey claims as its own.

He said that “the Republic of Cyprus does not have the equipment to protect ships operating in its exclusive economic zone”, but that “Greece, the French government, and French interests associated with the project have a role in the issue”.

“Nicosia is fully informed by Athens about developments,” he said, before adding that “if the project progresses”, it is believed that it will be fully completed by 2031.

Greece promises project will go ahead

His comments come after Greek government spokesman Pavlos Marinakis had on Friday insisted that the interconnector project will go ahead, saying that “the project will proceed based on the initial planning and any action which is contrary to international law will not hinder or change the initial planning of the project”.

Those remarks relate to the dispute between Greece and Turkey over who owns the seas between Cyprus and Crete, with Greece and Cyprus, citing the United Nations convention on the law of the sea (Unclos), stating that they do, while Turkey, which is not a signatory to Unclos, stating that they do not.

As such, according to Turkey’s position, beyond the 12 nautical miles of territorial waters to which Turkey believes both islands are entitled, the sea between Cyprus and Crete is Turkish.

By contrast, the position held by Greece and by the Republic of Cyprus is that, given that islands generate a full EEZ, the EEZs of Greece and Cyprus border one another south of Kastellorizo, Greece’s easternmost inhabited island.

Neither Greece, nor Turkey confirms reported interconnector compromise

It had been reported that so as to circumvent this dispute, the Greek and French governments, given France’s involvement through Meridiam and cable manufacturer Nexans, planned to “notify” Turkey of their intentions prior to issuing a navtex, a message used to transmit information to seaborne vessels, regarding planned seabed surveys for the laying of cables.

However, these reports are yet to be verified, and despite the Cyprus Mail making persistent and repeated attempts to reach both the Greek and Turkish governments on the matter, both have failed to provide a response.

Nonetheless, Damianos had said on Thursday last week that the navtex for the seabed surveys will be issued before the end of this month, with the Greek coastguard having said that French-flagged research ship the Abeille Marengo will be the ship conducting the surveys.