Croatia: The influence of Gazprom on energy market

26. April 2013. / SEE Energy News

In a move that is expected to significantly boost Croatia’s energy market, representatives in Zagreb and Russian company Gazprom agreed on Croatia’s participation in the South Stream project. Gazprom and Croatia’s national gas company Plinacro will build a South Stream pipeline in Croatia to supply the country’s gas market.

Gazprom announced the deal is only the beginning of Russian investments in the energy sector in Croatia.

“Gazprom wants a strategic partnership with Croatia, by construction of the South Stream pipeline, increased delivery, and cheaper gas prices for the economy and citizens,” said Alexei Miller, Gazprom CEO, after the January 17th meeting in Zagreb with Croatia President Ivo Josipovic, Foreign Affairs Minister Vesna Pusic and Economy Minister Ivan Vrdoljak.

According to the pipeline construction action plan between Gazprom and Plinacro, the project will begin in July 2015, and the first gas will flow in December 2016. The estimated value of the project is 60 million euros.

Gazprom announced it will export at least 2.7 billion cubic metres of gas annually to the Balkan nation. The South Stream gas branch is planned to enter Croatia near Vukovar, bordering with Serbia, and will run along the existing pipeline to Slavonski Brod.

Miller said that collaboration between Gazprom and Croatia has “great potential for co-operation in the energy sector,” while Pusic affirmed that “Croatia is firmly behind the agreement.”

The Gazprom chief added that the company could also increase gas supplies to Croatian thermal power plants, invest in new power plants and increase engine gas supply at a reduced price.

Nenad Kukulj, energy expert at the Croatian Gas Association stated also that the Russian company could become a serious competitor on the Croatian market.

“The market is open. As the largest gas company in the world, Gazprom is a serious competitor in the natural gas market. To further intensify supply competition, a [liquid natural gas] terminal should be built to ensure availability of gas from around the world,” Kukulj said.

This is supported, he said, by Gazprom’s offer of a 20 percent lower gas price to Petrokemija, the only Croatian mineral fertiliser factory, with an annual production capacity of 1.2 million tonnes.

“Others will have to follow the trend if they want to remain competitive. Household gas is still below the market price, so there’s hardly room for price cuts,” Kukulj explained.

According to Ljubomir Aksentijevic, advisor at the Serbian ministry of energy, Serbia will earn 200 milion euros from Gazprom for the concession of a gas transit route on its territory.

Source;Serbia Energy See desk/Croatian government

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