Hungary Reportedly Ready to Buy Croatian LNG Stake
Hungary is ready to buy a stake in Croatia’s proposed LNG terminal, an official in Zagreb claimed.
Budapest has sent a letter of intent for acquiring a 25% stake in the planned floating regasification and storage unit (FSRU) on the island of Krk, Croatian energy minister Tomislav Coric said on local television late April 7, according to Hungarian news agency MTI. The deal will depend on ongoing negotiations between the two and progress on signing contracts for regasification capacity.
Hungaryʼs foreign affairs minister Peter Szijjarto sent Zagreb a declaration of intent on the acquisition of the stake a few weeks ago, Coric claimed. Talks on the matter are ongoing, he added.
Hungary has mulled involvement in the stuttering LNG Croatia project for some time, but it has baulked at pricing and a lack of demand. LNG Croatia failed in a second open season late last year to secure the 1.5mn m3/yr in binding bids needed to make the project profitable. Hungarian companies bid for just 300mn m3/yr in non-binding capacity.
Regardless, LNG Croatia took a final investment decision on the 2.6bn m3/yr terminal in February, following a government decision to allocate €100mn ($112mn) to the project. EU funds will provide a further €101mn of the €234mn investment.
Hungarian officials have previously suggested that the country would be interested in buying a stake in the terminal, but the parties have failed to agree terms. The claim may not only be the result of wishful thinking in Croatia, however. Hungary has a habit of promising deals recently.
Seeking to take advantage of the changing landscape in south eastern European gas markets - Russian efforts to circumvent Ukraine, Romanian Black Sea resources, the southern corridor, new LNG and interconnection projects - the Hungarian government is keen to challenge the role of Austria’s Baumgarten as the region’s lone hub. The country also wants to raise leverage as its long-term supply contract with Gazprom expires in 2020.
Officials in Budapest regularly claim to be close to agreeing deals for new gas supplies. In the latest example, Szijjarto said in early April that Hungary could start importing gas from newly developed Azeri sources. “Hungary has an interest in sharing in Azerbaijan’s increased natural gas production from 2021, and in gas shipments destined for Europe,” he told MTI.
However, Hungarian gas players are often surprised by these statements and remains far more cautious. Sources claim to NGW that there is little ambition in the industry to develop the country as an alternative hub.