Croatia paves way for Adriatic LNG terminal

Thu Mar 11, 2010 11:30am GMT

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* Croat oil group INA will talk separately about LNG project

* Adriatic LNG project still seen operational in 2014

By Igor Ilic

ZAGREB, March 11 (Reuters) - Croatia's energy firms will change their participation structure in an Adriatic liquefied natural gas (LNG) terminal project to help make it operational in 2014, an economy ministry source said on Thursday.

The capacity of the future terminal, to be built on the northern Adriatic island of Krk, is planned at 15 billion cubic metres (bcm) of gas per year.

The target markets are central and southeastern Europe and Italy, and the project is part of Europe's efforts to diversify gas supply routes.

"Our two state-owned energy firms -- power board HEP and gas pipeline operator Plinacro -- will form a Croatian consortium for the LNG, but (oil group) INA INA.ZA (HINAq.L) will go alone," the source said.

"We hope it will facilitate the process," the source added.

The government is expected to adopt a decision on establishing the Croatian LNG consortium soon.

At the moment, four foreign energy firms keen to take part in the project are part of the Adria LNG consortium. They include Germany's E.ON-Ruhrgas EONG.DE, Austria's OMV (OMVV.VI), France's Total (TOTF.PA) and Geoplin from Slovenia.

Croatian firms should join later this year and have a 25-percent stake in the joint venture. INA can have 14 percent while Plinacro and HEP will jointly have 11 percent.

The LNG project has moved slowly in recent years, largely due to a slow decision-making process within Croatia, but the foreign investors are keen to speed it up because of a strong competition looming on the Italian side of the Adriatic.

"There is definitely good will now to speed up the whole procedure. We're nearing the moment of getting the location permit, which will make the final investment decision possible," a source familiar to the process said.

The investment is expected to be worth 800 million euros.

INA, in which Hungary's MOL MOLB.BU owns some 47 percent and the Croatian government 44 percent, said it remained committed to the project. (Editing by Zoran Radosavljevic and James Jukwey)

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