Gas from LNG terminal off Krk island soon in Croatia’s system

Archive (Photo: Floydrosebridge/Creative Commons license)

ZAGREB, Nov 29 (Hina) – The floating LNG terminal project in Omisalj off Krk island is nearing completion, the terminal will soon be ready for liquefied natural gas transport vessels, and the first gas from this new supply route is expected in Croatia’s system in early December.

The main part of the terminal is the “LNG Croatia” Floating Storage Regasification Unit (FSRU), which sailed out of Sagunto, Spain on Saturday with the first quantities of LNG for a work trial. The vessel is expected early next month.

According to the director of the LNG Croatia company, Hrvoje Krhen, the terminal will begin its commercial operation in early January when the first LNG vessel docks.

The terminal is connected to Croatia’s gas transport system by the new Omisalj-Zlobin pipeline.

The terminal’s annual storage capacity is 2.6 billion cubic metres. The entire capacity has been leased for the next three years by foreign and domestic companies, 80% capacity has been leased until 2027, and about 50% until 2035.

LNG terminal is a strategic project for Croatia

In July 2015, the terminal was declared a strategic project for Croatia. Its construction was strongly supported by the U.S. and the project was listed among the European projects of common interest as it will strengthen the European energy market and increase the security of gas supply for the EU, notably for countries in central and southeast Europe which want a new route.

In 2017, the Connecting Europe Facility approved a €101.4 million grant for the construction of the floating terminal, which had been estimated at €383 million. However, following the procurement of a smaller FSRU, the cost was reduced to €233.6 million. The government secured another €100 million grant, while the rest came from the HEP power utility and the Plinacro gas pipeline operator, the founders of the LNG Croatia company which runs the terminal.

A return on the investment is expected already with the lease of 0.52 billion cubic metres of natural gas a year. Annual operating costs have been estimated at €13 million.

Krhen says the terminal is expected to increase the competitiveness and liquidity of the natural gas market as well as result in lower prices for users.

The floating terminal, for whose construction the government opted in June 2016, will remain in operation until the completion of a land terminal on Krk island and its inauguration.

The floating terminal project was criticised by environmental NGOs and part of the local population as well as local politicians, who were worried about possible pollution as well as the economic benefit, among other things.

Environmental impact study and protection measures

A public consultation on the terminal’s environmental impact was held in autumn 2017. The following year an expert commission found that the project was acceptable for the environment, with the application of protection measures and by monitoring the state of the environment.

Construction began in January 2019.

FSRU’s annual capacity is 2.6 billion m3

The “LNG Croatia” was selected as the most cost-effective FSRU in a procurement procedure two years ago, when the Golar Power company offered to convert the Golar Viking LNG tanker, made in 2005, into a €159.6 million FSRU.

In October, the vessel arrived in Rijeka from a shipyard near Shanghai, where it had been converted into an FSRU.

The “LNG Croatia” has a storage capacity of 140,000 cubic metres, with a nominal LNG regasification capacity of 300,000 m3/h, or an annual capacity of 2.6 billion cubic metres.

The FSRU, which has state-of-the-art security systems, will enable the docking of all LNG transport vessels with capacities ranging from 3,500 to 265,000 cubic metres.

Gas to reach buyers via new pipeline

Gas will reach buyers by a 4.2-kilometre-long connecting gas pipeline and the newly-built 16.7-km-long Omisalj-Zlobin pipeline, an investment of HRK 440 million, including €16.5 million from European funds, whose construction was completed this month.

In order for gas to reach all customers, an LNG distribution station will be built in the Rijeka port. A €1.3 million grant has been approved from the Connecting Europe Facility for development studies and project documentation. The LNG Croatia company will apply for a grant for the construction of the station.

The LNG Croatia company says that FSRUs, of which there are more than 20 in the world, have had no incidents and that there have been no accidents either on the 500-plus tankers which have been transporting LNG for nearly 60 years.