EIB provides €339mn financing for Croatia’s KRK LNG import terminal project

By bne IntelliNews March 3, 2016

The European Investment Bank (EIB) announced on March 2 that it has provided €339mn financing for LNG Hrvatska’s €678mn liquefied natural gas (LNG) import terminal project on the island of Krk in the northern Adriatic.

The construction of the LNG terminal has become a priority for Zagreb due to the conflicts between Russia and Ukraine, which have put the natural gas supply to Europe at risk.

LNG Hrvatska is a company established for the purpose of building and operating the infrastructure necessary for receiving, storing and degasifying LNG. The project consists of the studies and implementation for the first LNG import terminal in Croatia, said the EIB, adding that the final scope and cost will be defined at a later stage.

The terminal will have a throughput capacity of 6bn cubic metres (cm) per year and will include a tanker jetty to accommodate the LNG carriers, two LNG storage tanks with a total storage capacity of up to 360,000 cm, vaporisers and ancillary equipment, according to the EIB.

LNG Krk is classified as a project of common interest (PCI) and included in the top priority list under the Central and South-Eastern European Gas Connectivity initiative (CESEC), the EIB also said. “The project would help to meet the security of supply objectives of the European Union,” said the EIB. “As the terminal will be located in Croatia, the project will also contribute to economic and social cohesion.”

In June, LNG Hrvatska said it had received 12 non-binding bids from applicants interested in booking capacity in the planned LNG terminal. The capacity request totalled between 4bn and 6bn cm per year.

The construction of the LNG terminal will start in the middle of this year, and construction work is expected to last three years, the head of the project company, Mladen Antunovic, was quoted by Croatian media as saying in May. Thus, the terminal should be operational in 2019.

LNG Hrvatska previously said it had received seven offers from investors interested in the development of the LNG terminal. Four offers were from industrial investors and three from financial investors, the company said in a statement. Industrial investors were asked to submit their offers by November 30, and financial investors by December 31. LNG Hrvatska did not name the potential investors, saying only that they are “world-class companies/funds with strong background in gas industry and financial businesses.”

In July, the Croatian government in July the planned LNG terminal to be a strategic investment project for the country. According to Croatian legislation, such projects benefit from simplified and quicker procedures in obtaining necessary documents and permits for the project implementation. The LNG terminal project is already included in the European Energy Security Strategy.

The construction of the LNG terminal is part of Croatia’s plans to become an energy hub in the South Eastern Europe. In addition to the LNG terminal, the Adriatic country is expected to launch a second licensing round for offshore hydrocarbon exploration and is also participating in the Ionian-Adriatic Gas Pipeline (IAP) project that will also pass through Albania and Montenegro and is designed as a leg of the Trans Adriatic Pipeline (TAP), which was selected to bring natural gas from Azerbaijan’s Shah Deniz to Europe as an alternative to the Russian gas.

The EIB has made several investments in Croatia recently. These include €300mn to co-finance priority projects in Croatia announced on March 30, 2015, €17.5mn of loans announced on October 6 for the expansion and upgrade of Dubrovnik airport and €20mn for Croatian lender Privredna Banka Zagreb (PBZ) announced on January 7.


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