This is an opportunity for a new beginning with Gazprom

The visit of a high-level Gazprom delegation to Croatia is a clear message that Gazprom wants to do serious business in Croatia and an opportunity to better organize and improve relations with Gazprom and Russia, which could mean lower gas prices for consumers, energy experts assess.

More than 90 percent of the oil refined in Croatia is of Russian origin, and in the case of gas, although Croatia has no direct contracts with Russian suppliers, which is not good, more than 90 percent of imported gas still comes from Russia, said energy expert Jasminko Umičević for Hina.

He expects that Gazprom’s arrival will positively affect gas prices for industry. He believes that with Gazprom’s entry, other companies will come and offer lower prices, and Ina will face competition and will have to reconsider its position.

A decrease in gas prices on the liberalized Croatian market can also be expected for the general public, Umičević believes. He mentions that, for example, the City Gas Company of Zagreb has announced an international tender, and some foreign companies have already received certain quantities, says Umičević.

The president of the Croatian Gas Association, Miljenko Šunić, also believes that the arrival of suppliers like Gazprom brings the possibility, primarily for large consumers, to achieve lower prices. However, this is not certain for households due to the interests of distributors and the cost of financing the construction of the gas network in southern Croatia, says Šunić.

Umičević believes that the visit of the Gazprom delegation is an opportunity for a new beginning in building good relations with that company and that the composition of the Russian delegation, which includes the company’s leaders, speaks to the seriousness of Gazprom’s intentions.

The amount of investment in the construction of the South Stream branch in Croatia of 60 million euros is equivalent to the price of just one oil tanker at current prices, but what is much more important is that Plinacro and Gazprom will enter into a partnership, Umičević believes.

He holds that the South Stream branch is important as another supply route for Croatia, especially since it will connect with the gas network of Eastern Europe, bypassing Ukraine, with which Russia has disputes over transit prices.

Umičević does not doubt Gazprom’s interest in making some profit in Croatia, and the opportunity for that is the construction of its own energy facilities and the sale of gas to large industrial consumers and power plants. He mentions the installation of Russian gas turbines in the power plant in Sisak as part of the clearing debt, which could use Russian gas as fuel, and the replacement of fuel oil turbines in the power plant in Rijeka with gas turbines by 2018, according to the European Union directive.

The fact that the Gazprom delegation is received by the country’s leaders is considered politically good. Gazprom is a ‘plow’ behind which other Russian companies will come, and the vast Russian market could open up for the Croatian economy and tourism, says Umičević.

Energy consultant Davor Štern considers it very good that Gazprom appears as an interested party for gas supply, but also for infrastructure development. He is particularly pleased with discussions about the South Stream branch through Croatia, which is currently envisioned as a branch, but if we are skillful and prove ourselves as a stable and serious partner, perhaps something will change in that field because Croatia has numerous advantages that make it suitable for the main route of the South Stream, Štern believes.

In this regard, he adds that it should not be forgotten that the supply of the planned 2.7 billion cubic meters of Russian gas annually, from the direction of Serbia, is possible even without the construction of the South Stream branch.

When asked what Gazprom’s arrival and similar companies mean for Ina, Štern says that if it is profitable for Gazprom to bring gas from Russia and be competitive with Ina, then Ina as a gas producer must reconsider its pricing and production cost policy.

Energy experts assess the construction of the South Stream branch as geopolitically undoubtedly justified, although some of them note that it would be good to know what exactly is at stake, i.e., where exactly the Russians intend to place their gas. Namely, some experts believe that Gazprom would not come to Croatia with such a strong team if it did not know where it would place a respectable 2.7 billion cubic meters of gas annually, which is the capacity of the South Stream branch, and they note that it is clearly a rounded project with secured large consumers.