LNG Croatia CEO Outlines Timeline to FID
A final investment decision (FID) on the LNG Croatia project is still pending, and is still expected during 1Q 2018, as the venture has already stated.
The €101.4mn ($115.8mn)grant for a floating LNG import terminal on the Croatian island of Krk represents one of the largest to the gas sector from the EU's Connecting Europe Facility (CEF), and would fund almost one-third of the total estimated €363mn project cost. However, while initially planned to be operational in 2019, scheduled start-up was delayed earlier this year until 2020.
There are two main reasons for this, LNG Croatia CEO Goran Francic said at the launch of the LNG Krk 2020 Support Network in Brussels on July 12.
First, there is still no final decision on the technical specifications for the floating storage and regasification unit (FSRU), which has delayed the tendering process among shipowners. For instance, the vessel’s regasification capacity should be between 180,000 and 265,000 m3/hour (between 1.6 and 2.3bn m3/yr) but LNG Croatia said it “doesn’t want to close the door on anybody” and that this could be negotiable. The tender is expected to start at the end of August or early September, but it will be “conditional” as the FID will not take effect until early 2018.
Second, the FID relies on an ongoing market consultation on whether there would be enough interest in the additional capacity brought by the new terminal, and also whether that interest would be commercial. Following a non-binding consultation during the past year, a binding open season procedure started on June 16. The first stage is a market consultation that is set to last until the end of July. It will be followed by an analysis of the market potential and a preliminary tariff estimation, and end in December with a final capacity and tariff setting that will lead to an official signing meeting with the project’s partners. Only then a FID will “hopefully” be reached, said Francic.
In order to be viable, the Krk project needs Hungary among others to import LNG at the terminal. Hungary however now argues that its interest lies with closer cooperation with Gazprom over its TurkStream pipeline project and last week pointed to the LNG Croatia project's slow progress.
Representatives of the Krk project are still hopeful, and point to renewed political support both at home and in Brussels, as well as the recent change in leadership and management structure of LNG Croatia. The July 12 launch of the LNG Krk 2020 Support Network, made up of Croatian members of the European Parliament as well as members of the Croatia-EU Business Council, aims to extend support for the project across southeast Europe in order to see it fulfilled by 2020.
Sara Vargas, Brussels