Polish gas transmission operator tightens cooperation with Croatia

Throughout the Three Seas Summit, Polish gas transmission operator GAZ-SYSTEM has entered into an agreement with Plinacro, a Croatian transmission system operator. The companies are going to collaborate in favor of development of the natural gas market in Central Europe.

– Launching the Three Seas initiative will contribute to expansion of the cooperation with the Croatian partner, that has been continued since 2013, particularly in terms of sharing of know-how. Thanks to this agreement, we could jointly support further development of the LNG market and its technologies as well as underground gas warehouses – declared Tomasz Stępień, CEO of GAZ-SYSTEM.

Plinacro started to implement the first stage of construction works at the LNG terminal, based at Krk Island, and expand the transmission infrastructure towards the neighbor states. However, GAZ-SYSTEM plans to increase regasification capabilities of the President Lech Kaczyński Terminal in Świnoujście. In order to enhance gas transmission between the terminals, it is indispensable to carry out further expansion of the Polish transmission system and provide a full integration of gas markets within the Region of the Baltic Sea and Central Europe.

Encouraging collaboration between operators from Poland and Croatia will spur the construction process of the North-South Gas Corridor, all the Members of the Three Seas Initiative, i.e. Austria, Bulgaria, Croatia, Czech Republic, Estonia, Lithuania, Latvia, Poland, Romania, Slovakia, Slovenia, Hungary, will benefit from in the future.

It is comprised of many bi-directional inter-system gas connections and domestic gas pipelines that are already in place, or are still on various stages of the planning or construction process.

The North-South Gas Corridor connects the LNG Terminal in Świnoujście with the Baltic Pipe (an offshore gas pipeline through the Baltic Sea that will connect the Danish and Polish gas transmission systems enabling to transport gas from fields in Norway), through central Poland, the Czech Republic, Slovakia and Hungary with the proposed Adria LNG terminal in Croatia.

It’s worth recalling, that on June 9, 2017 a memorandum for the supply of gas to Poland from the North Sea was signed by the Polish prime minister Beata Szydło in Copenhagen. According to GAZ-SYSTEM, the Baltic Pipe, expected to have a capacity of ten billion cubic metres, may be operational in October 2022.

Let us remind that the first efforts to build the Croatian import terminal – which would receive, store and re-gasify LNG – were initiated as early as in 2010. The state-controlled, Zagreb-registered energy company LNG Croatia LLC (LNG Croatia) selected the Omisalj county on the Krk Island in the North Adriatic Sea as a location for the facility, that would become a strategic hub to supply the Balkans region and Eastern Europe countries up to Poland.

In 2014, the European Commission selected LNG Croatia Import Terminal project to be included in the list of Connecting Europe Facility (CEF) Energy 2014 program.

– The construction of the LNG terminal on Krk, hopefully in the near future, and the connection towards the Baltic and Poland – I think it would contribute a lot to energy efficiency and security – said the Croatian President Kolinda Grabar Kitarovic during her visit to Poland in 2014.

The project was declared a strategic investment project of the Republic of Croatia by the Decision of the Croatian Government in July 2015.

The LNG terminal was also evaluated as an important element in diversification of the supply with natural gas, as well as for improving the security of supply with natural gas in South-Eastern Europe which has been confirmed by inclusion of this project in the Strategy for liquefied natural gas storage, announced by the European Commission in February 2016. It is among projects the European Union sees as important to its efforts to enhance energy security and reduce dependence on Russian gas.

According to the statement of the Croatian government, issued in February 2017, Croatia had received a 102 million euro grant from the European Union for the construction of the LNG terminal, which will be financed from the Connecting Europe Facility (CEF). The funds, approved by CEF’s coordination committee, will cover 50% of the pre-construction study and 27.94% of the works.

Currently, the government is in the final phase of selecting a strategic investor, with construction works scheduled to begin in 2019. The total value of the project is 363 million euro.

Croatia had originally aimed to construct a land-based terminal with three times higher capacity (up to 6 billion cubic metres per year) of natural gas, than the floating one, but such plans were now left for a later stage depending on future gas demand in the future.

The capacity of the terminal, now expected to be finished in 2019, is seen at around two billion cubic metres of gas a year, with Croatia targeting central European markets as well as domestic.

According to Goran Francic, CEO of LNG Croatia, who was speaking at an international gas conference on May, 3, 2017, the investment decision on the floating LNG terminal at Omisalj at the island of Krk, will be made in the first quarter of 2018 and the first gas from the terminal should be available to customers by early 2020. This summer LNG Croatia has been expected to announce a tender for the ship and for the construction of an infrastructure connection to the transport system.

GL, rel (GAZ-SYSTEM, EC, KPRM)