Croatia confirms plans for new LNG terminal in 2016

Croatia plans to build its own liquefied natural gas (LNG) terminal in the northern Adriatic and hopes to have it up and running in 2016, Deputy Prime Minister Radimir Cacic told an energy conference on Tuesday, Reuters reports.

"The investment's value is expected to be 600 million euros ($755 million) and we hope to get 25 percent of the money from European Union development funds," said Cacic, who is also the economy minister.

Croatia's two state-owned energy companies, power board HEP and gas transport operator Plinacro, formed the LNG Hrvatska consortium for the construction of the terminal.

"We would need four years to complete the project if we are very efficient," Cacic said. "The capacity of the terminal, at least in the first stage, will be 5 billion cubic metres of gas per year."

The LNG project is an alternative to a previously planned terminal at the same site on the northern Adriatic island of Krk. That project was started by an international Adria LNG consortium comprising four European energy companies: Germany's E.ON-Ruhrgas, Austria's OMV Group, France's Total and Slovenia's Geoplin.

However, the consortium postponed a final investment decision until 2013 because of falling gas demand on European markets amid the economic crisis. It declined to comment on Croatia's new plans and said only that the project was on hold until next year.

Croatia's slow decision-making process was blamed widely for the limited progress of the Adria LNG terminal, which was expected to have annual capacity of up to 15 billion cubic metres of gas.

Croatia consumes about 3 billion cubic metres of gas a year and imports between 30 and 40 percent of that. As well as diversifying its energy supply, Croatia hopes that the new terminal will make it a key transit country for gas transportation.

Cacic and other energy officials visited Poland last week for talks on possible gas links between the Baltic Sea and the Adriatic, but few details were made public.

Poland is building a terminal at Swinoujscie, a port in the western part of Poland's Baltic coast. The terminal, which is expected to become operational in 2014, is planned to provide access to 5 billion cubic metres of gas a year.