Croatia to Help Diversify EU Energy Supply

Croatia is taking steps to become a regional hub for energy production and shipment, a move that would help diversify supply options for other European Union members, the country's deputy economy minister said on Thursday.

The news comes as European leaders seek ways to cut their multi-billion-dollar dependence on Russian gas at talks in Brussels.

Croatia, which joined the EU in July last year, will on April 2 publish an international tender for gas and oil exploration in the Adriatic. In May, it expects to get a location permit that will allow a long-delayed liquefied natural gas (LNG) terminal project to move ahead.

"Given the interest for the data room we set up before the tender, we expect a decent number of bids from major global energy firms," Deputy Economy Minister Alen Leveric told Reuters, adding that the tender would be open for seven months.

He said the first exploration work on 29 areas in the northern and southern Adriatic was expected next year.Croatia expects some $2.5 billion worth of investments in oil and gas rigs in the Adriatic over the next five years.

"There is also a plan for a tender for onshore gas and oil exploration in the second half of 2014 for fields in northern Croatia," Leveric said.

Croatia covers about 65 percent of its gas needs from its own wells, most notably in the northern Adriatic.

"We are confident that after the exploration work we will be able to satisfy our full annual consumption from our own wells and become a net exporter," Leveric said.

Croatia consumes some 3 billion cubic meters of gas per year.

The planned LNG terminal on the northern Adriatic island of Krk would give the EU another possible supply route, a need highlighted by the crisis involving Ukraine and Russia.

"The next step (for LNG) would be to seek a strategic partner for the investment," he said. "One of the major firms that came to our data room for Adriatic oil and gas exploration also expressed interest in participating in our LNG project".

He would not identify any of the companies.

The Krk LNG project began more than a decade ago but the five Western companies involved as a joint venture put a hold on it, citing Croatia's slow bureaucracy and lower gas consumption in Europe. It was revived after the current Social Democrat-led government took office in late 2011.

Leveric said Croatia had held talks with Qatar and Cyprus on supplying gas for the Krk terminal, but added that gas imports from the United States in future should not be excluded.

The targeted markets would be central Europe, but also possibly Ukraine, he added.