The entire project is separated into four sections, and construction permits have been attained for over 90%, or 183 kilometers. Construction permits are currently being attained for the part of the first section that runs through Istria” said Branko Radosevic, Executive President of PlinaCroLast week, Premier Sanader’s government announced decisive moves to build a natural gas network in Croatia. At the Session of the Commission for Implementation of the Development Plan , an old plan for the construction and modernization of natural gas transportation in Croatia was extracted from the former government led by Racan, which foresees the construction of a natural gas network in a large part of Croatia by 2011. Because this project cannot be realized in a single mandate, neither Racan nor Sanader, whose government focused on the issue of foreign politics during the first two years of the mandate, had little enthusiasm for this project. The recent crisis caused by the conflict between Russia and the Ukraine over the price of natural gas has forced Sanader to turn towards complete implementation of the project which, as he says, is as important as the highway. The natural gas network project is valued at approximately $450 million, and its realization is expected in two phases. The first phase should be completed this year and totals $276 million, and the construction of a pipeline is expected from Pula - Karlovac, Lucko - Ivanja Reka, Zagreb East - Kutina and Kutina - Slavonski Brod. In this phase, we expect the construction of a natural gas system Baranje and the SCADA system, which would allow for further management of the complete natural gas pipeline system in Croatia. One of the most important parts of the entire project is the construction of a pipeline from Pula - Karlovac, which would allow gas from the northern Adriatic to reach national consumers without passing through Italy and Slovenia.

“The length of that pipeline is 190 kilometers. In the entire system, there are five measurement reduction centers - Pula, Labin, Rijeka East, Rijeka West and Delnice. The entire project is separated into four sections, and construction permits have been attained for over 90%, or 183 kilometers. Construction permits are currently being attained for the part of the first section that runs through Istria” said Branko Radosevic, Executive President of PlinaCro, the company responsible for the realization of this €90 million project. For all four sections, an international contracting tender has been issued and construction will begin on the second section on 18 January and should be completed within six months. The realization of the third section through Kvarner and Gorski Kotar to Delnice begins in February, and its completion is planned for August. The fourth section from Delnice to Karlovac will be constructed from March until September, and the first section, which is most problematic due to unresolved property ownership issues, should be completed in October.

“We hope that we will be successful in preparing all sections for construction work by the set deadline. We have over 8000 land parcels in this network, which makes it an extremely sensitive and difficult operation. We are nearly certain that this construction will be completed as planned, meaning that the pipeline will be completed by the fall; afterwards, we expect to take on a complicated technical task. It is the testing, connection and preparation of the pipeline as well as a technical inspection and connection of this new pipeline to the existing transport system in the Republic of Croatia; the most difficult part is connecting the production fields of the northern Adriatic because we will not connect the already existing supply directions whereby we would only need to open the tap for gas to flow; we need to establish a production field and connect it to our transport system, but I hope that we will be able to complete this project before the next heating season”, said Radosevic.

The capacity of the pipeline from Pula - Karlovac is 1.5 billion cubic meters per year, which covers the entire production of the north Adriatic fields. The Pula - Karlovac pipeline is of special strategic importance for Croatia because national production will be connected to our transport system, which significantly eases the regulatory role of the transport system. “That pipeline has economic importance because it allows us to bring the natural gas network to the areas it runs through – the Istria, Primorje-Goranje and Karlovac Counties. Of course, this part of the project depends on county governments which need to be coordinated parallel to the construction of the pipeline. Counties must issue concessions, public tenders, develop studies and project completion for distributive networks throughout these counties or regions. This pipeline allows for the connection of a future pipeline from Bosiljevo to Split, meaning a connection for Dubrovnik to the gas transport system of the Republic of Croatia,” pointed out Radosevic. Realization of this pipeline is only a part of the first phase which should be completed this year, which is quite ambitious seeing that over the past 3 years that this project has been worked on, 40% of the work has been completed and the remaining 60% for the work has to be completed by the end of the year. An especially problematic part is the section from Lucko - Ivanja Reka because this section was earmarked for the passage of the pipeline, but thanks to government neglect has since seen construction of many residential buildings.

The entire plan for modernization, development and construction of the natural gas transport system in the Republic of Croatia was conceived in three basic directions. In the Pula – Karlovac project, plans were included for the gas network of Lika and Dalmatia, as well as the gas system of central and eastern Croatia. That plan will be carried out in the aforementioned two phases, whereby the second begins next year and includes the construction of the Bosiljevo – Split pipeline, valued at €110 million; after Government intervention, they extended the pipeline to Dubrovnik, Slavonski Brod - Donji Miholjac - Dravaszerdahely as well as the construction of a natural gas system in Istria. The Government placed the construction of the Bosiljevo – Split section as a priority of the second investment cycle, which should be completed by 2009 or 2010, as well as the construction of the Slavonski Brod - Donji Miholjac pipeline, which will also be the new supply direction through the large European project Nabuco. “The Government entrusted us with the task of constructing an investment study on the inclusion of a pipeline from Split - Dubrovnik in the second investment period which we did. Including this pipeline in the realization of the complete plan, Croatia would receive 1200 new kilometers of pipeline, which would double the current natural gas pipeline system, and increase capacity by 3-4 times. This would allow for equal development of all parts of Croatia, which would finally all have the same conditions for growth and development,” said Radosevic.

The recent events related to the natural gas crisis have showed the importance of energetic independence for the country, which has received insufficient attention to date. With national production, Croatia needs to secure an additional amount of energy through imports, and this energy needs to be brought to our country; the prerequisite for this is the existence of infrastructure, meaning a pipeline. However, it is very important to not only depend on one supplier and one region. For that reason, it is important to have more supply directions, but in crisis situations these supply directions are not enough, and it is important to have a reservoir. A country which has its own energy reservoir is more independent. One of the solutions for the storage of a larger amount of natural gas are the LNG terminals, which store liquefied gas, delivered by ships. This liquefied gas is distributed in steel bottles, and is transported to the bottling center via trucks or cisterns.

“The LNG terminals are used as gas storage which provide energy security. Each country considering energy policy must have a diverse system of security and supply of energy from supply directions and storage in LNG terminals. These terminals are not only for storage but serve as a new supply direction, not through pipes but through ships. I think that Croatia needs to consider this alternative; the terminals are something to be considered by experts and discussions, and these decisions should not be made overnight,” commented Radosevic. The positioning of this terminal in Croatia can only be beneficial, however the first announcement for the construction of a terminal, which would have a capacity of nearly 14 billion cubic meters of natural gas per year, located on Krk resulted in a revolt by the local county government led by prefect Zlatko Komadina, despite the fact that ten years ago, Primorje-Goranje County supported the construction of this terminal. Though Krk is a good location for the distribution of gas in central Europe because of its position, Komadina wants the terminal to be constructed in Dalmatia; we will soon see what will become of this project for the construction of LNG terminals, valued at €800 million. In the Adria LNG project, INA would cooperate with 10% investment, with the remaining partners being Germany’s E.oN-Ruhrgas, Austria’s OMV, France’s Total, Slovenia’s Geoplin and Czech Republic’s RWG-Trangas. Croatia does not only need to create a supply direction, it must also attempt to connect to different energy sources.

The large natural gas sources that supply Europe are Siberia, the Caspian region, the Middle East and Africa. The latest events, caused by a disagreement between Russia and the Ukraine, show all the sensitivities of the European energy system, which is still largely dependant on the import of Russian gas. Because this situation is not ideal for European countries, not only in economic and political terms, they are all attempting to resolve their dependency on Russia as such a dependency could paralyze Europe. As such, a great deal of money is invested in the construction of supply directions for the Caspian region, Africa and Middle East, which should decrease the importance of Russia. A good example of energetic independence is Italy, which is the largest consumer of natural gas in Europe with 80 billion cubic meters per year. Italy already receives or has a plan to import gas from all aforementioned regions, Russia as well as the Adriatic, which makes it independent of energy crises. The only imported natural gas that Croatia currently receives is from Russia; necessary for Croatia and what the largest part of central Europe is leaning towards is a connection to the Caspian region.

“Croatia will be energy independent when it is connected to the Nabuco project. We cannot wait for Nabuco to be constructed to begin because it will then be too late. We must first construct all the necessary infrastructure. Contracts for transportation and pipeline rentals are made during the construction of the pipelines, and we need to be included now in order to rent the capacity and reserve the pipeline 20-30 years in advance. The Nabuco project will be realized through a consortium of five countries, and our supply direction will be Dravaszerdahely - Donji Miholjac - Slavonski Brod, for which we need to construct 73 kilometers of pipeline. Construction is expected during the second phase of Croatian gasification between 2007-2011. Via this direction, we can haul 1.5 billion, even 2.5 billion cubic meters of natural gas per year,” said Radosevic.

This would be a very important source of natural gas for Croatia because our current consumption is 2.7 billion. Taking into account that in Croatia the delivery of gas to the largest consumers was stopped for 10 days at the peak of gas consumption due to inadequate capacity, and that the gas source from the continental part of Croatia, specifically Pannonia, is constantly begin decreased, the sources in the northern Adriatic as well as new supply directions for imported gas are becoming increasingly important. The realization of these projects are very important to Croatia because the country wants to be energy independent and as such, the storage of a large amount of reserve gas for which LNG terminals serve best is vital. With regards to its large capacity, which would be sufficient to supply not only Croatia but other countries in the region, the realization of this project would have an important role on Europe’s energy map.