Croatia, investors see no delay for LNG terminal

ZAGREB, March 3 Tue Mar 3, 2009 1:17pm GMT

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ZAGREB, March 3 (Reuters) - European energy firms said on Tuesday they were confident about getting a location permit early next year to build an Adriatic liquefied natural gas (LNG) terminal aimed at supplying central and western Europe.

"We're confident that we can get the location permit at the beginning of 2010 and then start building so that the terminal could become operational on target, in 2014," the head of the Adria LNG consortium, Michael Mertl, told an energy conference in Zagreb.

Analysts and energy officials have said that sticking to the timetable was essential if the terminal was to compete, as a similar project is being prepared in Italy's port of Trieste.

Earlier on Tuesday, Croatia and Hungary signed an agreement to connect their natural gas pipelines by mid-2011 to ensure a steady supply for the region. The new pipeline would allow two-way shipments after the LNG terminal is built. [ID:nL3880993]

Adria LNG now comprises Germany's E.ON-Ruhrgas EONG.DE, Austria's OMV (OMVV.VI), France's Total (TOTF.PA), German utility RWE's subsidiary Transgas (RWEG.DE) and Geoplin gas company from Slovenia.

Foreign investors have slated a 25-percent stake in the consortium for Croatian partners. Those are expected to include oil group INA INA.ZA (HINAq.L), whose biggest single shareholder is Hungary's MOL (MOLB.BU), state power board HEP and gas pipeline operator Plinacro.

"Croatian firms will join the consortium soon," state secretary at Croatia's economy ministry, Leo Begovic, told the conference.

The location permit depends on an environmental impact study which the government must approve before the building starts.

Mertl said the consortium was preparing the study carefully after an earlier oil pipeline project suffered due to local environmental concerns.

to avoid bad experiences and failure an earlier oil pipeline project suffered due to local environmental concerns.

The government took two years to choose the location for the terminal, but analysts believe the project will now have a high priority, following a gas crisis in January caused by the dispute between Russia and Ukraine.

The terminal, likely to be built on the northern Adriatic island of Krk, will have capacity of up to 15 billion cubic metres (bcm) of gas per year. Croatia consumes about 3.2 bcm annually.

The investment is worth some 800 million euros ($1.01 billion). (Reporting by Igor Ilic; editing by Zoran Radosavljevic and Peter Blackburn)

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