Oil Report

Croatian LNG terminal to go ahead despite low demand

ZAGREB, Jan 16 (Reuters) - Croatia will press on with a planned floating liquefied natural gas (LNG) terminal project in the northern Adriatic despite a low number of binding bids from gas buyers, Energy Minister Tomislav Coric said on Wednesday.

Croatia is trying to diversify its energy sources but late last year received few bids for the use of the LNG terminal on the northern Adriatic island of Krk, which cast some doubt over its viability.

“It is a strategic project and is being implemented within that context. It is planned to be used by several countries, not just Croatia, and is part of the European Union plans to diversify energy sources,” Coric told the parliament while answering a deputy’s question.

He did not elaborate on how the government planned to financially support the LNG terminal which is tentatively seen as starting operations from the beginning of 2021.

The floating terminal has a planned capacity of 2.5 billion cubic metres (bcm) of gas per year, while Croatia received binding bids amounting to 0.52 bcm. Coric also said Croatia had also received the letters of intent for use of the terminal from some Hungarian companies.

The terminal is being partially financed by the European Union as part of EU efforts to diversify away from Russian energy imports. The targeted markets are countries in central and southeastern Europe.

The value of the terminal is seen at 250 million euros ($285 million), with the EU providing just over 120 million euros. The rest was originally planned to be financed on commercial terms.

Croatia annually consumes gas volumes slightly higher than the terminal’s planned capacity. Domestic production, which has fallen in recent years, accounts for slightly more than 40 percent of the country’s requirements.

$1 = 0.8775 euros Reporting by Igor Ilic; editing by David Evans