Gas wars: Croatian parliament passes LNG terminal law
Originally published in Italian on La Voce del Popolo on 15 June 2018
With 77 votes in favour and 25 against, on Thursday, 14 June the Croatian parliament approved the so-called “LNG law”. The ad-hoc statute was created to allow for the construction of the floating Liquefied Natural Gas (LNG) terminal in Omišalj, on the island of Krk.
The centre-left opposition fought to prevent the approval of the legislation: the Social Democratic Party (SDP) presented 360 amendments, which were all mercilessly rejected by the majority. The protests of local and regional authorities as well as environmentalists, all opposed to the floating LNG, were in vain.
The Croatian Democratic Union (HDZ)-led government was compact in their support of the project. The Minister for the Protection of the Environment and Energetics, Tomislav Ćorić, reiterated that the LNG terminal is of strategic importance for Croatia, allowing it to position itself on the European energy market. The Minister of Tourism, Gari Cappelli, also spoke in favour of the terminal, stating his belief that it will not have negative effects on the hospitality industry.
The controversies
The most heated opponents of the law were the president of the Primorsko-goranska County, SDP’s Zlatko Komadina, and the president of the environmental protection association “Eko Kvarner”, Vjeran Piršić. It is interesting to note that both of them while fighting against the floating terminal, are now in favour of a competing project that would see a larger LNG terminal built on the mainland. In the past, however, both supported the floating terminal over the one on the mainland.
It is not the first time this project creates controversies. There have been differing studies on the environmental impact, sibylline statements by the Russian Ambassador Azimov criticising the move away from Russian gas, and the sudden company swap by the director of ‘LNG Hrvatska’, who became the head of Gasfin.
This appearance of Gasfin was interpreted by some Croatian media as a Russian attempt to slow down the development of the terminal. Gasfin is a company registered in Luxembourg, close to Gazprom. Hit by controversy when one of its founding members became the suspect of attempted murder, the company has also been investigated in relation to the Uzbekistan Telecom corruption scandal when the Uzbek president’s daughter was arrested on suspicion of having pocketed a bribe.
In 2017, Gasfin took over from the Austrian State the outstanding debt (originally owed to the Austrian bank Hypo Alpe Adria) relating to the loan that was raised by the controversial entrepreneur Robert Ježić. By doing so, it became the owner of the land on which the onshore LNG terminal should rise. In parallel, the company started an intense media campaign in favour of the return to the original project of the LNG terminal on the mainland.
Those who support the construction of the LNG terminal state that this project would be the first step in Croatia’s efforts to avoid excessive dependence on Russian gas.
An endless story
To trace the history of the LNG terminal we must return to 1989, when the last Yugoslav government, under prime minister Ante Marković, gave the green light to a project proposed by a consortium made up of ČPP Prague, SPP Bratislava, MOL Budapest, Petrol Ljubljana, Energopetrol Sarajevo, and INA Zagreb. The consortium had to build a gas pipeline to transport gas from the Omišalj terminal to the Croatian, Slovenian, Bosnian, Austrian, Hungarian, Czech and Slovak markets. The planned capacity of the terminal was 7.5–10 billion cubic meters of gas per year. The project was valued at around a billion dollars, and the construction was to be completed by the year 2000. Several more companies from France (Total, Gaz de France), Germany (Ruhr-gas) and Britain (British Gas) showed considerable interest in the North-Adriatic pipeline project.
In November 1992, the then Croatian president Franjo Tuđman sent a letter to various world leaders, inviting them to a meeting to take place in the Brijuni islands at the end of the year. The theme of the conference was the discussion “of several projects of vital importance for the revival of the Croatian economy” among which “the construction of a gas pipeline for the transport of oil and LNG, respectively from the western Mediterranean through the northern Adriatic to the countries of central Europe”. The project was put on hold presumably because of the military conflict in Croatia.
The Adria LNG consortium was founded in 2007, of which the Austrian OMV Gas International (25.58%), the German E.ON Ruhrgas (31.15%), the French Total (25.58%), the Czech-German RWE Transgas (16.69%) and the Slovenian Geoplin (1%) were co-owners. In 2010 the joint venture LNG Hrvatska, formed by Plinacro and HEP, also joined the consortium. The same year the LNG Adria consortium had foreign partners leaving the project in the hands of the state companies Plinacro and HEP. With the future of the terminal now in the hands of State-owned companies and without financial backing from foreign partners the project was at an impasse. Until the plan got revitalised through the idea of a new ad hoc law that would facilitate the construction as well as the management of the plant.
Properties and concessions
The new law regulates the ownership of the land on which the terminal should rise and all its infrastructure, the various permits, access to the maritime domain and as well a “security fee for the supply” that could, in theory, give permission to the consortium to draw money from the taxpayers at times when the LNG terminal should have financial losses.
