Preparatory Activities for LNG Terminal Launched

Total Croatia News

The floating LNG terminal should be constructed on the island of Krk.

In the Sepen Bay on the island of Krk, a survey of underwater soil was started, as part of the LNG terminal project. These preliminary activities, which will last until 25 September, are being performed by the Geokon company, and include a series of drilling of the seabed and the geological survey of underwater soil where a dock for the floating LNG terminal will be built, reports Novi List on August 18, 2017.

Director of LNG Croatia company Goran Frančić points out that part of the research activities have already been done, but since the land terminal has been turned into a floating one in the meantime, new survey works are needed. All activities have been reported to the relevant port and maritime authorities, and the zone in which the works are conducted is marked so that vessels can avoid it.

The first underwater exploration activities on the site of the future dock were performed a few years ago, but Andrea Lopac from LNG Croatia explains that now it will be necessary to build a stronger and longer pier. “To be possible for us to do so, we have to thoroughly examine the underwater soil at the location, to see whether there are any cavities or unstable areas. The pier must be longer and firmer because it will have attached a floating terminal connected to the mainland by a gas outlet system with the 100 bar pressure. LNG ships will moor next to it,” says Lopac.

“In the first phase of the exploration, divers will mark the entire field, which will be followed by drilling. First, exploration wells will be drilled at a depth of 15 to 20 meters, and core and soil samples will be taken, which will then be sent for processing and analysis. Then we will start with the so-called destructive drilling, during which drilling characteristics of the soil are monitored,” says Lopac, stressing that drilling will not leave any damaging effects on the marine environment.

The results of this study will be interpreted by the end of September when the first round of the tender for the design of the terminal is expected. Also, the floating terminal vessel will have to be bought, and it will have a capacity of about 2.5 billion cubic meters of natural gas per year.

Afterwards, when all the costs are known, LNG Croatia will request the tariff calculation from the Croatian Energy Regulatory Agency (HERA), i.e. the price of gas at the future terminal. This will largely influence the second round of tender, which will be binding and where bidders will bid for the construction of the dock and the sale of the terminal itself.

LNG Croatia is in a somewhat particular situation because the European Commission has approved 103 million euros for the LNG terminal project in Krk, out of the total cost of 360 million euros, but with the condition that LNG Croatia must buy the terminal. Most of these vessels are usually owned by specialised shipping companies, which give them in a long-term lease and provide a special crews and management teams.

In the case of LNG Croatia, such a solution will not be possible, and the company will have to either buy one of the existing vessels on the market, provided there is one for sale at that time, or agree to build a new one at a shipyard. When purchasing a used vessel, the matter is further complicated, as the ship must meet all the criteria of the European Commission, so that LNG Croatia could receive the European funds.

Without these 103 million euros, the project would certainly collapse. Considering the current gas market situation, particularly in europe, where prices are stagnating at relatively low levels, gas from the LNG terminal can hardly compete with gas from pipelines. On the other hand, the construction of such terminals is always a political issue, in this case influencing the relationship with the United States, which wants to export its gas to Europe and thereby reduce the Russian influence.

In any case, if all preparations and tenders proceed smoothly, a building permit for the LNG terminal project on Krk is expected to be issued in May next year, after which the construction can begin. LNG Croatia has repeatedly said that the terminal could be opened by the end of 2019, which sounds unrealistically optimistic.

But, most importantly, it is necessary to find someone who will buy the gas which will arrive at the terminal, given that domestic consumption is not nearly enough to make the terminal cost-effective.

Translated from Novi List.


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