EditEuropean Public Prosecutor’s Office probes alleged corruption in Cyprus LNG terminal
The EU Commission has demanded a refund of the €101 million EU grant, citing mismanagement and potential fraud
The European Public Prosecutor’s Office (EPPO) has launched an investigation into allegations of fraud, misappropriation of EU funds, and corruption linked to the construction of a liquefied natural gas (LNG) import terminal at Vasiliko, Cyprus.
The probe targets former state officials and public servants involved in the tender process for this critical energy infrastructure project, which received €101 million in funding from the EU’s Connecting Europe Facility (CEF), alongside loans from the European Investment Bank (EIB) and contributions from the Electricity Authority of Cyprus (EAC), EUalive’s Cypriot partner Politis reports.
Project background and delays
The Vasiliko LNG terminal, a cornerstone of Cyprus’s energy strategy, involves a Floating Storage and Regasification Unit (FSRU) named Prometheus.
The project, intended to reduce electricity costs and enhance energy security by replacing polluting fuels, has faced significant setbacks.
Initially awarded in December 2019 to the CPP-Metron Consortium under a 24-month Engineering, Procurement, Construction, Operation, and Maintenance (EPCOM) contract valued at €500 million (less VAT), the project remains incomplete. Technical issues, design flaws, and unsafe materials have raised concerns about the terminal’s viability, with operational startup now potentially delayed until 2026.
In July 2024, the state-owned Natural Gas Infrastructure Company (ETYFA), a joint venture between CYGAS (70%) and EAC (30%), terminated its contract with China Petroleum Pipeline Engineering (CPP) due to non-payment disputes.
Construction of the pier and onshore facilities halted, and a subsequent “Plan B” to restart pier construction collapsed by late July 2025.
Recent reports indicate that subcontractors have refused responsibility for faulty materials, including uncertified high-pressure valves, further complicating the project.
Investigation details
The EPPO’s investigation, initiated in August 2024, was prompted by a January 2024 Audit Service report highlighting serious irregularities in the tender process and project management. Key issues under scrutiny include:
Violations of public procurement laws: the Audit Service identified procedural breaches during the evaluation of bids. Despite recommendations to exclude the CPP-Metron Consortium – the sole “valid” bidder – due to non-compliance, ETYFA proceeded with the contract award, citing the project’s urgency.
Irregular approvals and payments: ETYFA is accused of approving work forms, invoices, and subcontractors irregularly, potentially leading to disciplinary or criminal liability.
Suspected corruption: investigators have requested access to bank accounts to probe possible bribes linked to the tender process.
The European Commission has demanded a refund of the €101 million EU grant, citing mismanagement and potential fraud.
Project challenges and safety concerns
The Vasiliko LNG terminal is critical for supplying regasified LNG to EAC’s 868 MW Vasilikos power plant, which accounts for 37% of Cyprus’s electricity capacity.
However, persistent delays and technical issues have raised doubts about the project’s completion. Former Transmission System Operator (TSO) director Christos Christodoulides recently warned that the lack of safety certifications for key equipment could force a complete rebuild or even abandonment of the project.
He proposed an alternative: piping natural gas from the offshore Aphrodite reservoir in Block 12 of Cyprus’s Exclusive Economic Zone via a “tie-back” pipeline and filtration facility. This solution, requiring only 0.6 billion cubic meters of gas annually, could meet the island’s electricity needs more efficiently, but would necessitate renegotiating with Aphrodite’s concession holders.
Energy Minister Giorgos Papanastasiou has acknowledged the need for “damage control” and hinted at a potential “course correction” for the project.
However, he has not provided a clear timeline for completion, leaving Cyprus’s energy sector in uncertainty. The delays have kept electricity costs high, burdened consumers with additional expenses through EAC bills, and increased Cyprus’s reliance on polluting fuels, incurring millions in penalties.
The mismanagement of the Vasiliko LNG terminal has not only strained public finances but also undermined confidence in Cyprus’s ability to deliver critical infrastructure. As the EPPO investigation unfolds, the government faces mounting pressure to address the project’s failures and ensure accountability.
Cyprus’ energy ambitions
Cyprus has a large-scale energy project. In 2024, Cyprus launched a major energy initiative, with the government endorsing the Great Sea Interconnector (GSI), a multibillion-euro project to link Europe’s power grid with the Middle East. The GSI aims to connect Greece’s transmission network through Crete to Cyprus and eventually Israel, with a total cost of €2.4 billion, including €1.9 billion for the Cyprus cable.
The project has sparked a deepening rift within the Cypriot government, jeopardling fears it could falter despite its critical role in enhancing regional energy security.
The Ministry of Finance, led by Makis Keravnos, has firmly opposed funding, citing fiscal risks, while the Ministry of Energy, under George Papanastasiou, champions the project’s strategic importance, advocating for its continuation with robust safeguards.
In February, Cyprus and Egypt signed an agreement and memorandum of understanding to cooperate on developing Cyprus’s exclusive economic zone, a critical step for exploiting its natural gas fields. The partnership will focus on commercializing gas discoveries in the Kronos, Zeus, and Calypso blocks.
The gas will primarily supply Egypt’s market, with a significant portion exported to Europe, bolstering Cyprus’ role as a key energy supplier.
The original article in Greek can be found here.
Another source: Reuters. Edited by a.k.
Caption: Illustrative photo. The logo of the European Public Prosecutor’s Office at its Luxembourg headquarters. [EPPO]
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Updated: August 29, 2025 - 10:32
