Croatia LNG project in question as few bids emerge

ZAGREB, Dec 21 (Reuters) - Croatia has received few binding bids for the use of a floating liquefied natural gas (LNG) terminal planned for construction in the northern Adriatic, the state-owned company running the project said on Friday, casting doubt over its viability.

“We received binding bids for terminal capacity amounting to 0.52 billion cubic metres (bcm) of gas. We also have non-binding bids for an additional 0.3 bcm,” LNG Croatia said in a statement.

The deadline to submit binding bids has been extended twice this year, a move LNG Croatia attributed to a request by potential bidders.

“On the basis of received bids we will now test the economic viability of the project. Depending on the result, a decision on a potential model for this terminal will be made,” LNG Croatia added.

The terminal on the northern Adriatic island of Krk is being partially financed by the European Union as part of EU efforts to diversify away from Russian energy imports. The targeted markets are countries in central and southeastern Europe.

The value of the terminal is seen at 250 million euros ($285 million), with the EU providing just over 120 million euros. The rest would be financed on commercial terms.

Last month, Croatia picked Golar Power Ltd to provide a floating vessel as a storage and regasification unit for the terminal. The vessel would give an annual capacity of 2.6 bcm of gas.

A tentative start date for the terminal’s operations was set for January 2021.

Croatia annually consumes gas volumes roughly equal to the terminal’s planned capacity. Domestic production, which has fallen in recent years, accounts for slightly more than 40 percent of the country’s requirements.

Energy and Environment Minister Tomislav Coric recently said the government saw the Krk terminal as a strategic project that it might consider co-financing. ($1 = 0.8757 euros) (Reporting by Igor Ilic; Editing by Dale Hudson)