Croatia to Pay for LNG Terminal Despite Lack of Interest?

By 18 January 2019

Croatian Minister of Environmental Protection and Energy Tomislav Ćorić said on Thursday that the state is interested in the construction of the LNG terminal on the island of Krk and that it is a strategic project that deserves to be funded, reports Jutarnji List on January 18, 2019.

As he told reporters on the eve of the government session, it is a strategic national project for Croatia that is needed given that it would provide the security of gas supply to Croatia, regardless of any possible crisis, and "there have been such crises in the past.” In this context, Ćorić said, the project deserved to be funded.

Reminded by journalists that there was no interest for leasing the terminal’s capacities by potential buyers of gas, Ćorić said that "there is always an interest for security, believe me.” “If you understand the concept of security, then you realise that there is interest for security. The fact that the EU will finance this project with 100 million euros clearly shows its importance, above all for the security of supply and diversification of gas routes,” Ćorić said.

He added that there is interest, but that it is impossible to know what the gas prices would be in 2021 when the Krk terminal is supposed to become operational.

Finance Minister Zdravko Marić, asked about the impact of the project on the state budget, given that Minister Ćorić stated that, if necessary, the state would bear the costs, said that this was an important strategic project for Croatia and its energy perspective. He noted that the budget for this year had been passed. But, he added, if certain priorities come up later, as was the case in previous years, it was possible to discuss them and assess the fiscal effects. "We are carefully considering all important strategic projects, and I think this one is such a project because we are talking about Croatia's energy independence and perspective," Marić said.

Deputy Prime Minister Predrag Štromar said that he supported the LNG terminal as an alternative energy supply route. “We know there were crisis and gas prices were rising, we know there was even the possibility that there would not be enough gas, and we must always have an alternative," said Štromar.

In December, the LNG Croatia company received binding bids for 520 million cubic metres for the lease of planned capacities, as well as two non-binding conditional bids for 300 million cubic metres.

This is substantially less than 1.5 billion cubic metres, which is minimally necessary for the terminal to be cost-effective. The LNG terminal on the island of Krk is planned as part of the EU's effort to import gas from multiple sources, and not mainly from Russia. The target markets are the countries of Central and South Eastern Europe, which however do not seem to be very interested.

The total cost of the construction of the LNG terminal with the delivery pipeline is estimated at 265 million euro, and the EU is ready to invest 101.4 million euro in the project. The planned start of operations has been delayed repeatedly and is currently 2021.

More news on the LNG terminal can be found in the Business section.

Translated from Jutarnji List.