Large Interest of Bidders for LNG Terminal on Krk

Total Croatia News

The total of 27 bids have been received for the floating terminal and other facilities.

For the tender for the purchase of an LNG floating terminal (FSRU), as well as a docking station and other infrastructure, announced by the LNG Croatia company as part of the realization of the LNG terminal project on the Croatian island of Krk, a total of 27 bids have been received, 13 for the FSRU itself and 14 for the docking station and other accompanying facilities, it was announced by LNG Croatia, reports N1 on October 10, 2017.

On Friday, 6 October, the deadline passed for submitting requests for participation in both international public tenders – the first for the delivery of a floating terminal for transfer, storage and gasification, together with the provision of management and maintenance services, and the second for the design and construction of the docking station, auxiliary facilities and the pipeline.

“The interest has been great. In the prequalification process, 13 companies have demonstrated interest to participate in the delivery of a FSRU, while 14 companies are interested in the design and construction of other facilities,” announced LNG Croatia.

The company expects that the tenders will result in a successful conclusion of contracts by early 2018.

The initial deadline for applications for both tenders to be submitted was 29 September, but it was later extended until 6 October. After the prequalification phase, a call for binding offers will be announced.

According to plans, the LNG terminal on the island of Krk is supposed to be completed by the end of 2019, which was a condition for co-financing of the project from the EU funds, while the first gas deliveries from the terminal should begin a year later. The prerequisite for the money to be used it that they must be spent exclusively for the purchase of the FSRU. In this way, LNG Croatia has lost the possibility of leasing the terminal, which is the usual model for developing similar projects in the world. The advantage of leasing is that, despite larger short-term operating costs, it reduces the investment risk and enables the initial stage of the market development without the risk of so-called sunk costs.

Developers of the Croatian LNG terminal will have to either buy one of the already existing floating terminals which are no longer needed by their owners or order the construction of a new terminal according to specifications. However, since global shipyards are full and the building of a terminal lasts for about two years, it would appear that – even if the construction were to begin today – the initial goal of the terminal being operational in 2019 could no longer be met.

All in all, a lot of serious questions still lie ahead of those responsible for the realization of the LNG project on Krk.


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