Croatia Resurrects LNG Terminal Plan

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Croatia has resurrected plans to build its first liquefied natural gas (LNG) import terminal in an effort to reduce its reliance on Russian energy imports.

The Balkan country intends to build a 600 million-euro ($674 million) LNG terminal at Omisalj, on the northern Adriatic island of Krk. The project has been stop-go for a decade, but Mladen Antunovic, managing director of state-owned LNG Croatia, which is overseeing the project, said that work will start in 2016 and last three years.

The LNG terminal will have an estimated capacity of up to 6 billion cubic meters (bcm) of gas per annum. It will help provide an alternative to Russian gas imports for Croatia and neighboring Balkan countries that are almost entirely dependent on Russia for energy.

The terminal also could establish Croatia as a player in the growing push for LNG in Europe. The project has been resurrected following the collapse of the Russian-led South Stream pipeline project at the end of last year. For additional information, see December 3, 2014, article - Russia Scraps South Stream Natural Gas Pipeline, Chooses New Route to Turkey.

"The LNG terminal on Krk has become a European strategic project, included on a list of projects of strategic interest and further mentioned in the European energy security strategy, which includes only 33 projects relating to gas business," Antunovic told members of the news media. "Our LNG terminal has been given absolute priority at the EU level. After the cancellation of the South Stream pipeline project, this is the most realistic and logical project for southeast and central Europe."

He added that the company is also evaluating the construction of a "high-efficiency cogeneration power plant, possibly of a smaller capacity of 40 megawatts (MW), near the terminal. We are working out technical aspects of such a solution, since that's European practice."

Last week, European Commissioner for Energy Miguel Arias Canete said that LNG will have to play a greater role in Europe's drive to diversify its gas supplies. For additional information, see May 4, 2015, article - Europe to Boost LNG Imports.

Croatia does not have the money to build the LNG terminal itself and is looking to outside investors. It has invited expressions of interest and is carrying out the required feasibility studies, which it said will be completed by the end of the year.

Economy Minister Ivan Vrdoljak told reporters in March: "We are due to sign a deal with consultants who will complete a feasibility study by the end of this year. The final decision will be taken in the first quarter of 2016."

The country also aims to lay a gas pipeline along the Adriatic coast to Montenegro. This, in turn, will connect to the Trans Adriatic Pipeline (TAP), which will transport gas from Azerbaijan into Central Europe. "The collapse of South Stream is an opportunity for Croatia to become a regional energy center," Vrdoljak argued.

At the end of last year, Croatia and Poland announced a plan to link their LNG terminals by 2020, a year after the planned Krk terminal enters service.

The original plan for the Krk Island terminal was backed by the Adria LNG consortium, comprising E.ON AG (OTC:EONGY) (Dusseldorf, Germany), with a 31.2% stake; oil and gas companies OMV AG (OTC:OMVKY) (Vienna, Austria) and Total S.A. (NYSE:TOT) (Courbevoie, France), each with a 25.58% stake; RWE AG (OTC:RWEOY) (Essen, Germany) with 16.7%; and natural gas company Geoplin d.o.o. Ljubljana (Ljubljana, Slovenia), with a 1% stake. However, RWE ditched the venture in late 2009 after reviewing its global LNG business. For additional information, see October 26, 2009, article - RWE Withdraws from Croatia's Adria LNG Project.

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