Croatia's parliament gives go ahead for EU-backed LNG terminal

ZAGREB, June 14 (Reuters) - Croatia passed a law on Thursday to enable the construction of a liquefied natural gas (LNG) terminal, part of a European Union drive to diversify away from Russian gas imports.

The terminal, which will be built on the island of Krk in the northern Adriatic Sea, will be partly funded by the EU but has been criticised by environmental groups and local councils.

Environmentalists said ahead of the vote that they would stage fresh protests and may ask the Constitutional Court to rule if the law is in line with the constitution.

The project will be built in two stages, involving a floating terminal followed by an onshore facility.

The head of the company behind the project, LNG Hrvatska, recently said the cost of the floating terminal had been cut by 90 million euros ($105 million) to 250 million euros and its capacity scaled down to ensure its profitability.

The EU has said it would provide 101.4 million euros, while the remainder will be financed from equity and loans.

The law, which the government said was designed to help untangle property issues and other factors, was supported by 77 lawmakers in the 151 seat-parliament.

The terminal would supply gas to countries in eastern and central Europe, regions heavily dependent on Russian gas.

Before the vote, opposition lawmakers called on parliament to reject it on environmental grounds and some also questioned its profitability and said it may endanger tourism, the main engine of Croatia’s economic growth.

The energy and environment ministry has said the terminal would not pose a significant threat to the environment or tourism.

LNG Croatia is currently running a tender for delivery of a floating storage and regasification unit (FSRU) for the terminal. An FSRU is a special type of ship whereby LNG brought in by tanker is converted back to gas to feed into the grid. The tender expires on June 15.

The company is also preparing a second round of bidding for use of the terminal’s planned capacity of 2.6 billion cubic metres of gas a year.

The first round of bidding for the capacity of the terminal drew little interest.

U.S. government officials have said that U.S. energy firms are keen to be major suppliers for the terminal, but no decision has been taken. ($1 = 0.8566 euros) (Reporting by Igor Ilic; Editing by Susan Fenton)