Final investment decision adopted for construction of floating LNG terminal in Croatia
In accordance with planned deadlines for the construction of the floating LNG terminal on the Island of Krk, a final investment decision was adopted on 31st January 2019, LNG Croatia says in a press release.
The final investment decision on the construction of the floating LNG terminal project on the Island of Krk was adopted based on the results of the binding Open Season procedure which determines future revenues of the project, the projection of capital expenditures in relation to the conducted procurement procedures for FSRU vessel and EPC works (construction of jetty with auxiliary facilities and high-pressure connecting gas pipeline for the receiving LNG terminal) and the projections of required investment by the shareholders of LNG Croatia LLC.
The procurement procedure of the floating, storage, and regasification unit (FSRU vessel) was carried out in November 2018. The bid from company Golar was evaluated as the most economically advantageous, which offered a new conversion of the existing LNG tanker to the FSRU vessel worth EUR 159.6 million. It is an LNG carrier, which was built in 2005 and which sails under the name "Golar Viking". At the time of delivery, which is scheduled between 30thSeptember and 30th October 2020, the FSRU vessel will be delivered to the LNG terminal location from the shipyard as a new FSRU conversion in accordance with the highest technical and environmental protection standards.
The procurement procedure for the engineering, procurement and construction of jetty with the auxiliary facilities and connecting high-pressure gas pipeline for the receiving LNG terminal was carried out in January 2019. The bid from the consortium Pomgrad, GP Krk and STSI in the amount of EUR 58.442.409,03 was evaluated as the most economically advantageous. According to the deadlines for construction, the expected start of the works is end of March / beginning of April this year.
LNG Croatia LLC finished the binding process for booking the capacity of the LNG terminal (Open Season procedure), which resulted in capacity booking of the terminal in the amount of 0.52 bcma. An economic test on the 0.52 bcma capacity booking is positive by keeping the indicative tariffs on the level indicated in the binding Open Season procedure. In the Methodology of tariff item calculation, the grants are not shown as part of the capital expenses of the project, therefore the economic test made on a lower capacity booking than initially planned, using the same indicative tariff, is positive. In addition to the grant received by the European Commission in the amount of EUR 101.4 million, additional grant of EUR 100 million was obtained as per Government's Decision on financing the first phase of the project for the floating LNG terminal on the Island of Krk which was adopted on 30 January 2019.
In accordance with the conducted procurement procedures the total capital expenditures of the project have been reduced to EUR 233.6 million (the initial planned investment amounted to EUR 383 million). In addition to already approved grant from the European Commission in the amount of EUR 101.4 million, the Government of the Republic of Croatia, has made a Decision on financing the first phase of the project for the floating LNG terminal on the Island of Krk with which a grant in the amount of EUR 100 million was provided. The remaining part of the required capital expenditures in the amount of EUR 32.2 million will be provided by the shareholders of LNG Croatia LLC through increase in equity. Based on the 0.52 bcma capacity booking, in accordance with the allowed income regulated by the Methodology adopted by the Croatian Energy Regulatory Agency, the investment will have a positive return on investment for the shareholders of LNG Croatia LLC.