Political crisis could have unexpected consequences.
With recent government turmoil, MOST has lost control over four ministries, including the Ministry of Environmental Protection and Energy. The party representatives say that their departure might mean bad news for some of the energy projects, including the project of the floating LNG terminal of the island of Krk, reports Novi List on May 9, 2017.
According to MOST, it is quite possible that the government could now significantly slow down the project to “apologise” to the Russians for the problems that Russian Sberbank has with regards to Agrokor and to, in a way, compensate Russia for its losses in Croatia. The LNG terminal would be a direct competition for Russian gas in Croatia and in the rest of Europe, given that it could be purchased from other countries. By slowing down the project on Krk, the Russians will have the opportunity to continue to be the largest foreign supplier of gas for Croatia.
With the opening of the LNG terminal, gas from Qatar and other countries, including the United States, would arrive in Croatia and be distributed in the European Union, which is why the Russians would not be happy if it were to become functional by early 2020, as it was announced recently.
“The project will not be completely stopped because it is partially funded by the EU, but it could be slowed down so that the Russians soften their stance with regards to Agrokor,” say MOST representatives. “If Goran Frančić, the director of LNG Croatia, is soon dismissed, that will certainly lead to the slowing down of the project.” A few days ago at an international gas conference in Opatija, Frančić said that the investment decision on the floating terminal would be made mid-next year, while the first quantities of gas would be distributed no later than in early 2020.
If the project is indeed intentionally slowed down, it is unlikely that the European Union will pressure Croatia, although the European Commission has already paid almost nine million euros of the grant money for the project. Although Europe needs gas from LNG and other alternative routes, the EU is aware that without cheaper Russian gas it cannot survive and that the Russians cannot be ignored.
Russian Gazprom has recently announced that, from January to late April this year, natural gas exports to Europe increased by 15 percent. In those four months, it sent 66.2 billion cubic metres of gas to Europe, while, in comparison, the capacity of the LNG terminal on Krk would be around two billion. The largest increases in Russian gas imports in the first four months of this year were recorded in Austria, more than 82 percent, followed by Hungary (53 percent), Denmark (27 percent) and Germany (17 percent). In the same period, Gazprom increased its gas production by 13 percent.