Investors to Make Final Decision on Location of Croatian LNG Terminal

Text of report by Croatian newspaper Vjesnik website on 5 September

[Report by Zeljko Buksa: "Investors Have Final Say on Location of LNG Terminal"]

After the government suggests to them the best location for the construction of an LNG terminal for the delivery of liquefied natural gas (that is most likely to be near Dina in Omisalj municipality on the island of Krk), the final decision on the location will be made by the investors, in other words by the Adria LNG international consortium.

The current members of that consortium, which is headquartered in Zagreb, are well-known European energy companies: E.ON Ruhrgas (31.15 per cent), OMV Gas International (25.58 per cent), Total (25.58 per cent), RWE (16.69 per cent), and Geoplin (one per cent). Their ownership shares are going to be proportionally reduced, however, because a total of 25 per cent is reserved for the Croatian companies Ina [Petroleum Refining and Sales Enterprise], HEP [Croatian Electricity Board], and Plinacro. They are going to found by the end of this year a new company whose share of the aforementioned consortium will be 25 per cent. According to the Law on Regional Planning, the final decision on that location is supposed to be made after comprehensive studies which that consortium is supposed to carry out.

Those include a variety of surveys, an environmental-impact assessment, an exchange of regional-planning documents, and the preparation of a preliminary design. The preparation of the main design on the basis of which a construction permit will be sought will come only after that is received.

Since the representatives of that consortium, as well as local experts, have persistently been pointing out that the location near Dina on Krk is the best one, it is to be expected that Adria LNG is going to accept the government’s suggestion and commence preparations for construction at that location. Otherwise, the Study on the Choice of the Best Location for an LNG Terminal, the preparation of which was led by the Ekonerg Institute of Zagreb, established that the Dina location was the best of the 10 locations that were analyzed in the industrial areas of Krk, Rijeka Bay, and Kvarner but that there were also high-quality locations on the Istrian coast in the area of Raska Bay, the best of which was Ubac. Of the 13 criteria that were compared, “Dina is superior in seven and Ubac in six, but it is not possible to compare them on a precise basis because essentially different areas are involved,” the study’s authors concluded. After that, the government’s working group decided that it would propose the location near Dina on Krk to the government as the best one.

The most important thing, however, is that the preparations, which have already been quite drawn out, are completed as soon as possible so that the construction of the terminal will commence as soon as possible. This involves, namely, a very important energy facility that will make it possible for Croatia not to depend on just a single source for the providing of gas, because terminals of that type, in contrast to gas pipelines, can receive gas delivered by ships from all corners of the world. That is especially important because of the fact that Croatia is overly dependent on Russia for the supplying of that fuel, for it satisfies no less than 40 per cent of its consumption with Russian gas. How problematic that can be could best be seen two winters ago, when our deliveries of Russian gas were significantly reduced as a result of the Russian- Ukrainian dispute. The latest tensions between Russia and NATO over Georgia are also provoking fear of possible supply disruptions. An additional reason to speed up work is that many European countries are already building or planning the building of LNG terminals, as a result of which those that are late could have problems securing sufficient quantities of liquefied gas and a market for it. The investment in the construction of the LNG terminal is estimated at 700 million to 1 billion euros. Deputy Prime Minister Damir Polancec thinks that the initial timetable for the construction of the LNG terminal by 2011 is overly optimistic. According to him, it could realistically be completed in 2014.

Originally published by Vjesnik website, Zagreb, in Croatian 5 Sep 08.

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