Thursday, 12 May 2022

Marić: HRK 75 Million In Budget Revision To Procure Gas

ZAGREB, 12 May 2022 - Finance Minister Zdravko Marić said on Thursday that the budget revision proposal for this year envisages HRK 75 million for gas supplies, but that that item is "open," adding that the revision should be sufficient until the technical revision usually done at the end of the year.

Answering reporters' questions, Marić said that "HRK 75 million has been secured for gas procurement, which isn't a big amount but that item is still open and a redistribution of funds is still possible."

When it comes to guarantees, the total amount is about HRK 1 billion, said Marić, adding that the model for securing gas supplies for next season will be presented when it is finalised.

He said that the objective is to find a model that will secure adequate filling of storage capacity and ensure everything that is necessary for the next heating season and that the relevant ministries, Croatian Bank for Reconstruction and Development as well as representatives of gas suppliers are working out the model.

Asked if that meant that the state would be involved in supplying gas and filling storage facilities, Marić answered affirmatively, confirming that that implied cooperation between the state and the HEP state-owned electricity provider.

On Saturday, Marić said that in normal circumstances the period between two heating seasons is used to fill gas storage facilities. However, in the current disrupted circumstances and given the exceptionally high price of gas, small gas suppliers can hardly cope with it financially, he said then.

Budget revision will be sufficient until technical review at the end of the year

Marić said that the current budget revision should be sufficient until the end of the year.

"At the end of the year... we have a technical budget revision which in fact just states the situation with budget revenue and expenditure. If in the meantime... some significant deviation occurs, we will have to be prepared for it, however, this revision should be sufficient until the end of the year, until the technical review," he said.

Presenting the budget revision at the cabinet meeting on Thursday, Marić said that the guarantee reserve had been increased as one guarantee had been protested. Asked which guarantee it was, he said that VTB Bank had protested a guarantee for Brodosplit amounting to €32 million.

For more, check out our politics section.


Tuesday, 3 May 2022

Without Russian Gas, No Heating During Winter for Croatia, Says Jutarnji List

ZAGREB, 3 May 2022 - If Russia cuts off gas supplies to the European Union, Croatia will be able to fill a maximum 30% of its gas storage capacity, the European Network of Transmission System Operators for Gas (ENTSOG), which brings together EU member-countries' gas transport companies, has estimated.   

According to the Jutarnji List daily of Tuesday, ENTSOG's estimate is contrary to claims by the Croatian government which has been trying to assure the public that Croatia enjoys a high level of security against possible disruptions in the delivery of Russian gas.

In a scenario of a full Russian supply disruption, most European countries will not be able to reach the storage level target of more than 80%, with significant departures from the target among them, ENTSOG says, noting that its analysis shows import capacity limitations in Central Eastern Europe as well as infrastructure capacity limitations in the North-West and in the South of Europe. Those factors limit possibilities to alleviate gas shortages, ENTSOG says in a report on possible consequences of a Russian embargo on gas exports to the EU.

The same source says that Great Britain, Belgium, France, Spain and Portugal will have the least difficulty filling their gas storages if Russia cuts off gas supply, and that in case of such a scenario those countries will fill between 90 and 100% of their gas storage capacity.

Germany, the Netherlands and Italy are estimated to fill 30-60% of their storage facilities, ENTSOG says, warning that the three countries hold 50% of the EU's gas storage capacity.

Croatia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary, Austria, Slovenia, Bulgaria and Romania are in the third group of EU countries that will have most difficulty weathering a Russian gas export embargo, and they are likely to fill a maximum 35% of their natural gas storage capacity.

ENTSOG does not give an estimate for Latvia, Finland and Estonia but rather an assessment saying that in the event of a Russian gas export ban, those countries will be faced with a major rise in demand for gas from Central and Southeastern European countries during the summer months.

ENTSOG recalls that Central and Southeast European countries meet their gas demand during the summer with gas from Latvia, Finland and Estonia, while buying Russian gas ahead of the heating season, says Jutarnji List.

Tuesday, 26 April 2022

State Will Fill Okoli Gas Storage Facility If Lessees Do Not

ZAGREB, 26 April 2022 - Economy Minister Tomislav Ćorić has made a decision allowing the state to fill the Okoli underground gas storage facility if those leasing it fail to do so, and they are not doing it for now as it is not cost-effective due to high gas procurement prices.

The decision was made based on an intervention plan to respond in time to potential gas supply disruptions, the ministry said on Tuesday, adding that the decision was proposed by a crisis management team established to monitor gas supply security.

The team has ordered that Okoli should be full at 90% of capacity at the start of the next heating system, by 1 November.

Those leasing the storage facility must fill 63% of capacity by 1 August, 68% by 1 September, 74% by 1 October, and 90% by 1 November.

They now have to inform the Economy Ministry how much of the capacity they plan to use and if they do not plan to use the capacity they leased, they lose the right to store gas at Okoli so that strategic gas reserves can be made. In that case, the state will have to find the resources to fill the freed capacity, most probably via state-owned companies.

The entire capacity of Okoli has been leased, but due to gas price hikes, it is not being filled. This has caused concern as filling takes four months and given the uncertainty of regular supply, it is essential that filling begins on time, it was said.

Okoli's capacity is 553 million cubic metres.

For more, make sure to check out our business section.

Thursday, 31 March 2022

Gas In The Centre Of The Energy Crisis, Croatia In Somewhat Better Position

ZAGREB, 31 March 2022 - Gas is at the centre of the current global energy crisis which resembles the oil crisis of the 1970s, however, Croatia is in a somewhat better position than most European countries albeit the high price of gas and other energy sources cannot be avoided, a Gas Forum heard on Thursday.

The developments concerning the global energy sector are unprecedented and the war in Ukraine just worsened the situation in particular, the gas crisis, Danijel Žamboki,  the head of the management board of the Croatian Energy Regulatory Agency (HERA) said addressing the forum organised by the Energy Marketing organisation.

He underscored that in the "worst-case scenario" Croatia is in a significantly better position than other European countries because of its diversified supply direction with the LNG terminal on Krk Island and indications of increased domestic production.

In addition, until now, Croatian consumers have been protected against gas price hikes that are unprecedented in Europe.

The director of Croatia's largest gas distributor - Gradska Plinara Zagreb (GPZ) - Miroslav Živko, said that despite the crisis GPZ can ensure the continuation of business and he announced investments in green technology such as hydrogen.

Croatia also has great potential with geothermal energy sources.

Energy price hikes - a trigger for recession

Professor of Faculty of Economics, University of Rijeka - Faculty of Economics and Business University of Rijeka Nela Vlahinić Lenz warned that energy price hikes are a classic trigger for recession, which is usually preceded by high inflation and increased interest rates.

Official data regarding inflation in Croatia aren't that bad, said the professor and added the perception has become heightened.

Monetary authorities need to be concerned with how to restrict inflation without interest rates increasing and the economy going into recession.

She expects the main impact to be felt in the autumn when price increases are inbuilt in goods and services however inflation could increase in the spring.

She added that there had not been government measures to address the inflation in the first quarter most probably because the cabinet did not want to increase the government deficit and adversely affect the plans for accession to the euro area.

Vlahinić Lenz believes that economic growth this year will be significantly lower than planned and the question is what the government can still do to buffer the effects of the energy price hike. Europe is no longer running away from state control over energy prices and possibly subsidising households and the economy.

"Public finances are doing well and the government has room for that," concluded Vlahinić Lenz. 

Business: For more, check out our business section

Saturday, 26 March 2022

Croatia Mulling Increase in Capacity of Krk LNG Terminal

ZAGREB, 26 March 2022 - Croatia is considering the possibility of increasing the capacity of its LNG terminal on the island of Krk from the current 2.6 billion cubic metres of gas to 2.9 billion cubic metres annually, Prime Minister Andrej Plenković said in Brussels on Friday.

He explained that the current infrastructure allows for this increase.

"We believe that we can achieve this increase with the current infrastructure of our LNG ship and all the existing plants there," Plenković said after the end of the two-day summit meeting of the European Union, which discussed Russia's military aggression against Ukraine, energy and energy price hikes.

Plenković reiterated the strategic importance of the Krk LNG terminal for the diversification of gas supply routes, particularly in the current crisis.

Considering the EU-US partnership expressed in the Joint Statement on the Liquefied Natural Gas (LNG) imports from the US, which expect to rise, Plenković said that investments in LNG terminals and the accompanying infrastructure would definitely grow, adding that it remains to be seen how many ships are available.

Ukrainian refugees

Plenković told the press that Croatia had already taken in 10,000 refugees from Ukraine, who fled the Russian invasion of their country.

It is certain that more and more refugees will arrive and that they will stay longer, he said.

Croatia can cover the costs of accommodation of Ukrainian refugees on its own until a joint model for financing is not found at the EU level, the premier said.

Thursday, 3 March 2022

INA Gets Exploration License For Concession In Egypt

ZAGREB, 3 March 2022 - INA, the leading Croatian oil, and gas, has been given "an exploration license for the East Bir El-Nus concession (Block WD-8), located in Egypt’s Western Desert," the leading Croatian oil and gas group stated on Thursday.

"This is a follow-up to INA's activities on this key foreign market for the company in terms of oil and gas exploration and production," the press release says.

"INA enters the new exploration license as a 50% partner, while the remaining 50% is held by Energean, which will also be the operator. In the coming period, Energean and INA will finalize the license agreement with the Egyptian Government and the Egyptian national oil company, and before it enters into force it will have to be confirmed by the Egyptian Parliament."

In their bid, INA and Energean committed to conducting a 180-square-kilometer 2D seismic survey and a 200-square-kilometer 3D seismic survey, followed by at least two exploration wells.

For more, check out our business section.

Wednesday, 23 February 2022

LNG Terminal has Delivered Over 1.9 Billion m3 of Gas

ZAGREB, 23 Feb 2022 - Almost 3.3 million cubic metres of liquefied natural gas has been brought to the LNG lfoating terminal at Omišalj since the start of 2021, when it was put into commercial operation, and more than 1.9 billion cubic metres has been delivered to the Croatian transport system, LNG Croatia says.

In almost 14 months, 23 LNG transshipments have been carried out, and as many LNG transport ships have arrived at the terminal, the terminal's operator adds.

The largest cargo amount arrived from the United States, followed by Nigeria, Qatar, Belgium, Trinidad and Tobago, Egypt, and France.

Contracts on the use of the terminal have been signed with the INA, HEP, MET Croatia Energy Trade, MVM CEEnergy Croatia, and PPD companies.

85% of the terminal's capacity has been leased until 2027.

Responding to a question from Hina, LNG Croatia says that 95% of the gas imported via the terminal has remained in Croatia.

In the first nine months of the terminal's operation, 75% of the regasification capacity has been utilised, the operator says, adding that the financial results for 2021 will surpass the profit planned.

Since the start of commercial operation, there have been no problems or standstills.

In February 2021, not one LNG transport ship docked at the terminal because its users were focused on Asian markets due to a very high demand for LNG and consequently higher prices, the company says, adding that decisions on the commercial terms are made by the terminal's users in cooperation with their suppliers and that the operator's job is only to receive and deliver LNG.

Since early March 2021, all planned ship arrivals have occurred.

Asked if they expect similar market disruptions, the operator says that by building an LNG terminal, Croatia became part of the global LNG market and is subject to all disruptions like markets around the world.

The first LNG tanker, the Tristar Ruby, arrived at the Omišalj terminal off Krk island with 143,000 cubic metres of LNG on 1 January 2021, marking the start of commercial operation.

The floating terminal serves for the reception of LNG ships, gasification and delivery into the gas transport system to reach end users.

For more, check out our business section.

Thursday, 17 February 2022

INA Nets Profit Of €173m In 2021

ZAGREB, 17 Feb 2022 - The INA Group registered a net profit of HRK 1.31 billion in 2021, after a loss of HRK 1.14 billion in 2020, the leading Croatian oil and gas group said in a financial statement on Thursday.

INA's net sales revenue grew 51.5% on the year to reach HRK 22.4 billion in 2021.

The company's CCS EBIDTA excluding special items reached HRK 3.03 billion, up by 70% from 2020.

"In 2021 the macro environment for oil and gas industry has improved thanks to the easing of restrictive measures and rising hydrocarbon prices. In such environment Exploration and Production once again spearheaded the recovered result, although the production natural decline continues in line with the mature portfolio. The other segments further supported the results, primarily Retail due to improved fuel and non-fuel sale, also partially due to tourist season, which was better than expected," the company's management board chair, Sandor Fasimon, was quoted as saying.

The financial statement notes that the hydrocarbon prices had doubled compared to 2020.

This price increase helped the Exploration and Production segment to be "the main contributor to the results with EBITDA excluding special items of HRK 2.5 billion, despite natural decline of production on mature fields."

"Refining and Marketing including Consumer services and Retail CCS EBITDA reached HRK 0.9 billion on the back of better Retail sales both in fuel and non-fuel segments."

Investments rise

Investment activities increased throughout the segments compared to 2020 with CAPEX level of HRK 1.6 billion, of which roughly half was spent in Refining and Marketing. The main strategic investment, Rijeka Refinery Upgrade Project continues with focus on construction works and equipment delivery to the site.

INA said it had successfully issued a HRK 2 billion bond on the domestic market in December 2021, "creating a solid financial base for the intensive investment cycle ahead."

"In time of changes in the energy sector, INA is committed to diversifying its portfolio and assisting the green transition, regardless of our core business. Two new solar power plants are going to be built at Virje and Sisak, which is an important step in the company’s green electricity production," the statement said.

For more, check out our business section.

Tuesday, 8 February 2022

Parliament's Gas Bill For Last Three Months of 2021 Soars 4.5 Times

ZAGREB, 8 Feb 2022 - Parliament told Hina on Tuesday that it spent HRK 882,000 on gas for the last three months of 2021, four and a half times more than at the same time the year before.

The gas bills for October, November and December 2020 totalled HRK 192,000.

The bill for October 2020 was HRK 41,500, just under HRK 70,000 for the following November and over HRK 80,000 for December 2020.

The gas bill for October 2021 was HRK 184,588, rising to HRK 333,812 for November and to HRK 364,162 for December.

Parliament spent HRK 1.3 million on gas last year and HRK 438,300 in 2020. The bill covers two buildings.

Parliament said it procures gas via the Central State Office for Public Procurement.

(€1 = HRK 7.5)

Thursday, 27 January 2022

Economy Minister Says Mayor Responsible for Unacceptable Gas Price in Zagreb

ZAGREB, 27 Jan 2022 - Economy Minister Tomislav Ćorić said on Thursday that Mayor Tomislav Tomašević and his team were responsible for the markedly higher corporate gas bills in Zagreb, and not HDZ personnel, because they failed to procure it at better prices.

Tomašević said earlier the former director of the City Gasworks' Supply division, Igor Pirija, who ran the division until last October, was responsible and that he was HDZ personnel, claiming that he did not buy gas at cheaper prices on time and that Zagreb businesses were in trouble because of him.

Ćorić said Tomašević should do his job and that Pirija was not in the HDZ.

Alluding to Tomašević's past as an activist, he said, "That phase is over, now it's necessary to run Croatia's largest city."

"At one time, Holding and the Gasworks were taken over by the new city administration. (Nikola) Vuković became the head of Holding for a few months. He could have procured the gas whenever he wanted. That procurement would have cost three and a half to four times less than it costs today," Ćorić said, referring to the Zagreb Holding multi-utility conglomerate.

He added that Vuković and his successors were appointed by Tomašević.

The minister said the mayor and his team should assume responsibility for the higher price, find the money, buy enough gas, whatever the cost, and honour the contracts with corporate clients.

He said Tomašević, Zagreb Holding and the team running the City Gasworks assumed responsibility for the Gasworks when they assumed responsibility for the city last May, regardless of who was director until one, two or five months ago.

"A new president of Holding's management board was appointed in June. Talks probably began then with the companies owned by Holding. Someone should have said then that the City Gasworks was short of 600 gigawatt hours of gas to meet corporate needs until the end of April," Ćorić said.

He reiterated that the price of gas at that time was several times lower than today and that the mayor and his team should have acted.

City Assembly vice president Mislav Herman (HDZ) told Tomašević to stop using the City Gasworks's previous management board as an excuse because he had enough time to buy gas at far lower prices.

He said that since Tomašević came to power, there was enough time to contract a new gas price, claiming that on 15 August last year the price of gas was about five times lower than today.

"Instead of making illegal appointments in Zagreb Holding during the summer, he could have been buying gas at then far lower prices so that our corporate clients' bills for December and the period ahead were far lower," Herman said.

He, too, said Pirija was not an HDZ member.

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