LNG TERMINAL ON THE ISLAND OF KRK - Status and Project Update December 2019
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LNG TERMINAL ON
THE ISLAND OF KRK
Status and Project
Update
December 2019
Project Background
➢ LNG Terminal on the Island of Krk has important role in facilitating European Union Energy
Security Strategy.
➢ It is a game changer to the security of supply of the Republic of Croatia and Central and South
Eastern Europe.
➢ Project realization will strengthen security of supply, create new market opportunities, increase
market competition and have positive impact for final consumers.
➢ The project is of strategic importance for the
Republic of Croatia and the European Union.
➢ It is included on the EU List of the Projects of
Common Interest and is one of the projects of
the Three Seas Initiative.
➢ The project received EU Grant of maximum
101,4 mil EUR under the Connecting Europe
Facility (CEF).
Basic Project Information
➢ Project is divided into two phases, first phase is Floating LNG Terminal with total capacity of 2,6 bcma, and
second phase which will depend on the future market development and demand is Onshore LNG Terminal
with total capacity of 5 bcma.
➢ According to the current market circumstances and demand (total Croatian gas consumption is
approximately 2,6 bcma), the decision is to proceed with the first phase of the project and to realize floating
LNG terminal.
➢ Transmission system with the development of Omišalj-
Zlobin pipeline can accept 2,6 bcma from the Terminal
(Omišalj-Zlobin pipeline is under realization and will be
operational by the end of 2020).
➢ In order to accept more than 2,6 bcma additional
investments in transmission system are necessary
(additional investment of approximately 200 mil EUR is
necessary in order to accept 3,5 bcma from the Terminal
and additional investment of approximately 100 mil EUR
to accept 7 bcma).
➢ Interconnection with Hungary which is currently under
construction and will be fully operational by the end of
2019 will have the capacity of 1,7 bcma to be exported
through Hungary on a yearly basis.
Ownership Structure LNG Croatia LLC was established with the purpose to realize LNG terminal on the Island of Krk and to operate the terminal (according to the EU Directive and Croatian Gas Act LNG terminal operator is regulated business).
Project Investment Total project investment costs are based on the closed procurement procedures and valid contracts for all necessary onshore EPC works, FSRU vessel together with land acquisition/expropriation costs.
Project Financing On 30th January 2019 the Government of the Republic of Croatia adopted Decision on financing the Project in the amount of € 100 million. On 31st January 2019 LNG Croatia Shareholders adopted Final Investment Decision.
Activities Accomplished ➢ Project documentation ➢ Procurement procedures ➢ Contracts for EPC works and FSRU Vessel ➢ Necessary permits ➢ Rules of operations and tariff implementation ➢ Market Test (0,52 bcma capacity booking was obtained out of 2,6 bcma) ➢ Project financing
Market Potential and Market Test
➢ European Union import dependence on natural gas in the last ten years has increased from
43,4% to 70,4%. Dependency on natural gas import is expected to rise to almost 90% by 2040.
➢ The target markets for LNG Croatia have been identified in 8 countries for a total demand of
approximately 37 bcma.
➢ The primary markets are considered in Croatia and Hungary for a total demand of
approximately 13 bcma.
➢ There is a significant potential of the LNG use as a
fuel in transport sector as an obligation for all EU
Member States in the region.
➢ According to the moderate scenario of economic
development and energy transition, in the North
Adriatic maritime traffic and heavy road traffic on the
main corridors of Croatia, Slovenia and Hungary on
the core TEN-T network, regional market by 2025 is
expected to consume around 523,000 m3 of LNG
annually as a fuel (0.306 bcma), while by 2030 region
that gravitates to the LNG terminal on the Island of Krk
will consume about 1,323,000 m3 of LNG annually
(0.774 bcma).
Market Test and Tariff Methodology
➢ Indicative tariff for regasification service was set during Open Season procedure at 1,39
EUR/MWh NCV (1,25 EUR/MWh GCV) for 20-year period. It was envisaged that at the level of
1,5 bcma capacity booking with minor introduction of SoS charge, Final Investment Decision
will be obtained, and the project will be financed from its own resources through loan (132.2 mil
EUR).
➢ Since the Open Season resulted with 0,52 bcma capacity booking in order to cover the gap
between allowed revenues and regasification revenues and to close the project in order to
adopt positive final investment decision, Government grant measure was introduced (100 mil
EUR Government grant) together with SoS charge.
➢ Investments that are being financed from EU or Government Grants, as well as purchase of the
land, according to the Tariff Methodology, are not eligible as regulated assets, and therefore are
excluded from the calculation of the return on assets and thus we sould keep the same tariff on
0,52 bcma.
➢ SoS charge is covering the gap between allowed and actual revenues in case of lower capacity
booking as it is the case with 0,52 bcma (it is envisaged by LNG Act as security of supply
measure).
➢ Based on the 0.52 bcma capacity booking, in accordance with the allowed income regulated by
the Methodology adopted by the Croatian Energy Regulatory Agency and taking into
consideration that the majority is financed through grants, the investment will have a positive
return on investment for the shareholders of LNG Croatia LLC.
FSRU – Golar Viking Conversion
Main Technical Specifications ➢ At the time of delivery (30 October
2020), the vessel will be delivered to
Capacity of an LNG carrier to be the LNG terminal location from the
3,500 m3 to 265,000 m3 shipyard as a new FSRU conversion in
accommodate on Terminal
accordance with the highest technical
Total capacity of LNG storage tanks 140,206 m3 and environmental protection
standards.
Nominal LNG loading rate from LNG carrier 8,000 m3
Nominal LNG re-loading to LNG
➢ Currently all long lead items such as
1,500 m3 LNG pumps, engines, regasification
bunker/feeder vessel
unit, power module, instrumentation
Nominal LNG re-loading to LNG truck-trailer 40 m3 and other equipment are under
production and FATs are currently
Regasification operation mod Open loop ongoing.
Maximum LNG regasification rate
300,000 m3/hr ➢ All main equipment together with the
(limited by the national gas transmission vessel will be shipped in the Hudong
2,6 bcma
system) shipyard in Shanghai in February 2020
when conversion will start.
Maximum installed natural gas sendout rate
451,840 m3/hr
(second development phase of national gas
transmission system
3,5 bcma ➢ Once conversion starts it takes 6
months to finalize everything together
with necessary approvals and
Maximum natural gas sendout pressure 100 bar
classification certificates from DNV
Terminal availability classification society.
(24/7 with maintenance period 7 98%
days/annuallyEPC Works Started in April 2019 The scope of EPC contract work is the design, engineering, procurement and construction of jetty, connecting gas pipeline (4,20 km), high-pressure installation including pigging station, water and drainage, auxiliary facilities and buildings, a dynamic and multi body mooring analysis, terminal HAZOP and other relevant studies, including the commissioning and trial operation.
➢ EPC works will be finalized by October 2020. ➢ FSRU Vessel will arrive to the terminal location by 30 October 2020. ➢ During November and December 2020 commissioning and trial works will be executed. ➢ LNG terminal will start to be fully operational from 1st January 2021.
THANK YOU!
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