Oil report

CORRECTED-Crunch time for Croatia LNG terminal schedule

(Corrects quote in paragraph 16 to make clear LNG terminal near Trieste is onshore, not offshore)

ZAGREB, Nov 6 (Reuters) - Croatia’s Adriatic liquefied natural gas (LNG) terminal has reached a critical point if it is to remain on schedule and become operational in 2014, a leading representative of investors said on Friday.

“It’s still feasible, but it’s a challenge,” said Michael Mertl who heads the Adria LNG consortium comprising four foreign energy firms.

In an interview with Reuters he said that the consortium was looking forward to the Croatian companies joining as soon as possible to give a boost to this preparation phase.

“We’re looking forward to have Croatian partners with us as we cannot make proper planning of commercial contracts without their input. We cannot wait any longer to maintain a chance to become operational in 2014. At the moment we have no indications when they will join,” Mertl said.

The Adria LNG consortium now comprises Germany's E.ON-Ruhrgas EONG.DE, Austria's OMV OMVV.VI, France's Total TOTF.PA and the Geoplin gas firm from Slovenia.

The Croatian side -- including oil group INA INA.ZAHINAq.L, state power board HEP and state-owned gas pipeline operator Plinacro -- should have a 25-percent stake in the joint venture.

Their participation had been announced by officials more than a year ago, but little has happened since.

Croatia has yet to appoint a new economy minister, who is in charge of the project, after the resignation of the former minister last month.

Some observers have also said that INA’s plans to get out of gas business raised questions about the company’s participation in the LNG project.


Germany's RWE RWEG.DE has withdrawn from the project citing its focus on other similar ones in northern Europe. But Mertl said that would have no significant impact on the terminal planned to be built on the northern Adriatic island of Krk.

“It is not an unusual thing that the composition of a consortium changes over time. At the moment we have no information on any other changes in that respect,” Mertl said.

He said that the final investment decision was expected in 2011 and that interest among banks for financing the terminal, whose costs are estimated at some 800 million euros ($1.19 billion), had already been looked at.

“Our preliminary feedback shows that banks are interested in financing long-term projects in energy field,” Mertl said.

The capacity of the future terminal is planned at up to 15 billion cubic metres (bcm) of gas per year. Croatia consumes 3.2 bcm annually.

The target markets are countries in central and southeastern Europe, but also Italy where Mertl saw competition from a rival project.

“The situation on the Italian market is important for our planning strategy, so whatever happens there may have an impact on our plans. At the moment preparations for an onshore LNG terminal near Trieste are maybe four or five months ahead of us,” Mertl said.

He said that the consortium expected to have an environmental assessment procedure completed by the end of January and location permit approved by the beginning of the second quarter in 2010.

“In that case we would still be on schedule,” Mertl said. (Reporting by Igor Ilic; Editing by Kevin Liffey)