While Croatia is just preparing for the construction of an LNG terminal, many European countries have long been procuring liquefied natural gas. LNG terminals exist from Portugal through Belgium, the United Kingdom, and Italy to Greece and Turkey.
written by Zdravko Cesar and Ante Livajić
The Croatian LNG terminal is expected to soon receive the green light from the Ministry of Environmental Protection that it is environmentally acceptable. Thus, Croatia and the investor Adria LNG are one step closer to realizing the LNG terminal project on the island of Krk. – We will very soon submit a request for a location permit. We hope to receive it by mid-year – stated Michael Mertl, General Director of Adria LNG d.o.o.
Investment and Revenue
This is a key document as it determines the conditions for construction and environmental protection measures. After its issuance, the investor will prepare project documentation and select the main contractor. The companies gathered in the Adria LNG consortium – E.ON Ruhrgas, OMV Gas&Power, Total, and Geoplin – will wait for the outcome of two important procedures before making a final investment decision. Croatia needs to enable the acceptance of gas from LNG from various sources, i.e., the acceptance of heavy LNG in its regulations. Adria LNG will also submit a request to the Croatian Energy Regulatory Agency (HERA) to grant it an exemption from third-party access rights. Investors in new large infrastructure projects can request an exemption as this possibility is provided for by the European Gas Directive to ensure project competitiveness and supply security.
The annual regasification capacity of the LNG terminal in the first phase will be 10 billion cubic meters of gas, with two tanks for temporary storage of LNG of 195 thousand m3. In addition to a new procurement direction and sources of gas supply for Croatia, the LNG terminal will supply Italy, Slovenia, Austria, and Hungary. Without a connecting gas pipeline, this is an investment worth 800 million euros. The construction and operation of the Adria LNG terminal will bring stable revenues of 1.8 billion euros to the Croatian economy over a minimum period of 30 years. Plinacro will also have additional revenues from gas transport fees. The Croatian LNG terminal has a good position in relation to the main suppliers in the Middle East and North Africa from where LNG is expected to arrive on the island of Krk.
The largest producers
Qatar ahead of Australia, Algeria, Brunei
The largest and first world producer of LNG is Qatar; followed by Australia, Algeria, Brunei, Indonesia, and as things stand, Canada will soon join this group. Canadians plan to export liquefied natural gas to Asia, where the largest markets for this energy source are located. The most, 28 LNG terminals are located in Japan, South Korea has four, three are in India, and one each in Taiwan and China. China is preparing for a true renaissance in the use of liquefied natural gas and is considering the construction of about fifteen new LNG terminals to meet the demand of its rapidly growing economy for secure energy sources.
Record number of projects
While Croatia is just preparing for the construction of an LNG terminal, many European countries are already procuring liquefied natural gas. LNG terminals exist from Portugal and Spain in the west through Belgium, the United Kingdom, and Italy to Greece and Turkey in the east. How interesting it is in Europe is shown by the record 52 locations where the construction of new terminals is being considered. Although a good portion of the mentioned 52 projects will likely never be implemented, the Croatian LNG terminal is among the most likely to be built alongside projects in Albania, Cyprus, Germany, Ireland, the Netherlands, Poland, Romania, and Ukraine. In addition to terminals where liquid gas is returned to a gaseous state, the first terminal in Europe for the reverse process, liquefaction of extracted gas, has been built in northern Norway. Thus, Norway has joined a number of countries that supply the world with liquefied natural gas.
Some European countries have turned to LNG because it was cheaper to invest in terminals than in the construction of new expensive gas pipelines leading to Russia. Another reason for investing in LNG is precisely the exposure to Russia, the main gas supplier for Europe, which seeks to reduce this by building terminals. Construction provides the opportunity to procure gas from various sources, from producers in the Middle East, North or Central Africa, Southeast Asia, or Australia. Although gas prices have significantly fallen due to the global recession, investments in LNG continue, especially in Australia, which exports most of its wealth to Japan, China, and South Korea. Only in the USA is there a decline in demand for liquefied natural gas due to successful investments in technology that extracts gas from shale. The USA has thus become an example of good satisfaction of the need for natural gas from its own sources.
