(Adds PM Sanader's comment, para 4)
By Igor Ilic
ZAGREB Jan 20 The Russian gas supply crisis
should spur support in Croatia for the Adriatic liquefied
natural gas (LNG) import project, which has been repeatedly
delayed by environmental concerns and political inaction.
The Balkans were severely affected by the halt in gas
supplies arising from Moscow's dispute with Kiev and Croatian
Prime Minister Ivo Sanader said last week Zagreb saw the LNG
terminal as crucial for diversifying energy supplies.
The terminal, planned by a consortium of Croatian and
European energy firms, should also improve supply security for
the wider region as it will be able to process more gas than
"I expect to meet representatives of all the partners in the
consortium in the next two weeks when we would agree on the
quick start of the project's implementation," Sanader told
reporters after a meeting a European Commission energy official
Adria LNG's foreign partners are keen to get it built before
nearby projects in Italy are completed.
"The race for the gas market is open and tough and the later
the (Croatian) terminal is built, the smaller will be its market
share," an industry source close to one of the local investors
said. "The government should keep that in mind."
A government source close to the project also said it was
time Croatia took concrete steps to get the project going.
"Croatian companies should as soon as possible sign an
agreement with foreign partners and I believe the government
will decide on it by the end of the first quarter at the
latest," the government source said.
LNG is natural gas cooled to liquid for transport in
tankers. It is regasified at terminals for transport through
pipelines, offering greater flexibility on sources than gas
supplied directly through pipelines.
After considering the location of the terminal for two
years, Zagreb settled on the town of Omisalj on the northern
Adriatic island of Krk last September.
The investment is estimated at 800 million euros ($1.04
billion). The terminal is planned to have an initial capacity of
about 10 billion cubic metres (bcm) of gas per year, with the
possibility of increasing this to 15 bcm later on. Croatia
consumes some 3.2 bcm annually.
"It makes the terminal important for the whole region,
including Italy, Austria, Hungary, Romania and Slovenia,"
Michael Mertl, head of the Adria LNG consortium, told Reuters.
The consortium now comprises Germany's E.ON-Ruhrgas
EONG.DE, Austria's OMV (OMVV.VI), Total (TOTF.PA) from France,
German utility RWE's subsidiary Transgas (RWEG.DE) and
Slovenia's Geoplin gas company.
The Croatian partners, with a 25-percent stake, are expected
to include state power board HEP, state gas pipeline operator
Plinacro and oil and gas group INA INA.ZA HINAq.L, which is
48-percent owned by Hungary's MOL (MOLB.BU) with 44 percent held
by the Croatian state.
The Adria LNG consortium plans to get a location permit
after the government approves an environmental impact study, a
key condition for building to start in 2010 and end by 2014.
"We aim to do everything we can to make sure the study is
well prepared and comprehensive," Adria LNG said in a statement.
The investors are cautious after the Druzhba-Adria oil
pipeline project, aimed for the export of Russian oil through
the Adriatic, was blocked several years ago by environmentalists
worried over potential pollution of the pristine coast.
This time, experts expect a smoother ride.
"The discussions so far seem to show that environmentalists
are now readier to accept the project, if environment protection
is properly taken care of," the industry source said.
(Editing by Zoran Radosavljevic and Daniel Fineren)