Croatia Plans to Become Gas Giant of the Balkan Region

The youngest member of the EU is planning a significant increase in its natural gas production to become an energy leader in the Balkan region.

Currently, Croatia meets about 60% of its domestic needs for natural gas production, or about 1.5 billion cubic meters (bcm) of gas. But if all goes as planned, this amount could be several times bigger, reaching upwards of 10 bcm.

''Croatia will surely be an exporter of natural gas',' Ivan Vrdoljak, Croatian Minister of Economy told Natural Gas Europe in an interview. 

Croatia, which joined the EU on July 1 2011, is planning to sign production sharing contracts for oil and gas exploration at the end of May, the first of such kind in the country's history.

Can you discuss Croatia's present natural gas production and how it impacts domestic needs?

Our current natural gas production does not meet all our domestic needs. We produce about 60% of domestic requirements, which is good considering other countries in our surroundings. But we are not satisfied with that output. We think that the natural gas potential of Croatia far exceeds our domestic needs. As a proof of this thesis, for example, is the Italian side of Adriatic sea. Over the past 20 years, on that side of the Adriatic, the average production of natural gas has been 10 billion cubic meters (bcm) of gas annually. We produce about 1.5 bcm annually. That means that if we achieve the goals that we have already started to implement, we will not have any kind of problems to satisfy the domestic needs of natural gas.

What is the geological potential of Croatia when it comes to oil and gas?

It is hard to precise before the research works are undertaken, but we can make assumptions. But I am assuring you that those are the numbers that are measured with several billions of cubic meters annually, as it is in Italy.

In January, Croatia awarded 10 licenses for hydrocarbon exploration and drilling in the Adriatic to three consortia. Were you happy with the interest received in the process and in the outcome?

As you mentioned, three consortiums are participating; the American Marathon, Austria's OMV and the domestic company, INA. We are absolutlely satisfied with the number of offers and companies that applied on our tender call. It was far greater than our expectations considering the geopolitical situation. By that, I mean the drop in the price of oil and the crisis in the oil industry.  Realisticly speaking, we came into a situation that could have jeapordised the public tender in the way that no one answered or applied. Instead, we received offers from a significant American company, a European partner, and our oil company INA that continues its investment in domestic production. 

What is the process now for the selected bidders towards signing the Production Sharing Agreements?

After we finish the strategic assessment of safety of the environment, we are going to sign the contract on exploitation of natural gas and oil by the end of May. This will be the first of such contract in the history of this country.

What steps are being put in place to address the concerns of coastal residents and environmentalists about the risks of exploration in the Adriatic?

We are open for all suggestions on what we need to incorporate in order to protect the environment, especially the Adriatic Sea. Our goal is to reduce present risks in the Adriatic. By that, I mean tankers and ships are importing oil into Croatia. I think that several thousand tankers are far more dangerous than several dozen exploratation platforms. In that way, we want to lower the risks of impact to sea life and to keep the Adriatic clean and safe from the filthy tankers.  On the other hand, we want to have our own production and in that way, more cheaper energy.

Will there be work for local companies? Does Croatia have the experts and logistics to exploit natural gas?

Of course, there will always be jobs for domestic firms and companies and that is a positive product of that project. One goal of such a project is energy efficiency and safety, and the other one is employing domestic components which must be expert and relevant. But I do not see a problem in that, I think that Croatia has the experience and knowledge for that. For 40 years, we have been exploring the sea and on land. We have our own domestic oil and gas company, INA, which is full of knowledge and prepared for the job, we have CROSCO, a state firm dealing with integrated drilling which has operated in the areas of ex-Yugoslavia and worldwide. We must give a chance to people who knows how to do that job and not to give a chance to shipmen who are importing filthy oil in Croatia.

Do you see the potential for Croatia to become a oil and gas exporter?

Croatia will surely be an exporter of natural gas. As for oil, it is harder to estimate this at this point, but as for gas, we will surely be exporters.

How important is the regional cooperation in research projects of natural gas?

Very important. In my opinion, crucial. Cooperation must be double directed, so that everyone can gain from it. No country should be running its own energy policy. Energy policies should be incorporated at the regional level and at the end, at the european and global level. Cooperation with our neighboring countries is essential in conduction public tenders, cooperation in enviromental protection and similar matters. We must protect each other, collaborate with each other and we must set the highest standards for gas and oil exploration together. We must say to each other what to put in the contracts with explorers in order to protect our interests. Croatia is completley dedicated to cooperation with its neighbours and that is going very well. I am pleased to say that we have excellent cooperation with Montenegro, for example.