The conflict in Ukraine uncovered the EU’s dependence on Russian fossil fuels, however an oil pipeline conceived as a Yugoslav rival to Soviet infrastructure might assist Croatia emerge as a winner from Europe’s power disaster.
Zagreb is engaged on plans that would double the capability of the Adria oil pipeline to 2mn tonnes a month. That may be a lifeline for fellow EU member states Hungary, Slovakia and Slovenia in addition to Serbia and Bosnia, which have terminals and refineries that connect with the pipeline and are attempting to cut back dependence on Russian fuel.
It is usually rising its capability to import liquefied pure fuel from the present 2.9bn cubic metres a yr to six.1 bcm/y, whereas an enormous funding cycle in wind and solar energy will permit it to change into a web power exporter, analysts stated.
“Croatia has a superb probability to be the power gateway for numerous neighbouring central European nations within the present power geopolitical state of affairs and difficulties of power imports from Russia,” stated Igor Dekanić, a professor on the geology and mining school of Zagreb college.
Croatia had begun to diversify its energy sources lengthy earlier than Moscow’s invasion of Ukraine, importing a rising quantity of oil from Azerbaijan and Kazakhstan whereas lowering oil flows from Russia to simply over 1 / 4 of its complete imports in 2020, the bottom stage since 2003.
Its regasification unit on the port of Omišalj strengthened Croatia’s independence from Russian fuel, which was already lower than 1 per cent of its complete power consumption by 2020, in response to the IMF. Imports of LNG, primarily from the US, have changed Russian provides.
Now Zagreb stands to revenue from changing into a bigger provider of neighbours pressured to diversify their power imports, amassing elevated oil and LNG transshipment charges.
Hungary, Croatia’s north-eastern neighbour, can be strengthening its Adriatic power hyperlinks. Budapest-based power group MOL has relied on the Druzhba (Friendship) pipeline that pumps Russian crude throughout Ukraine to produce its refineries close to Budapest and Bratislava. That mannequin is now threatened by EU sanctions, doable conflict harm or a Russian determination to halt flows, as Moscow did with fuel by way of the Nord Stream pipeline.
The EU exempted piped crude from a ban on Russian oil introduced in Might which comes into drive in December, and just lately introduced plans for a cap on Russian oil. Supply was disrupted by way of Druzhba in August, one other reminder for nations in southern and japanese Europe to hasten contingency planning.
MOL’s fallback possibility was the Adria pipeline, which begins at Omišalj. It might lastly assist Budapest scale back dependence on Russian oil, a plan it first hatched with Yugoslavia when the discussions over a regional pipeline began within the Nineteen Sixties. MOL can be making ready an improve of its refineries, at a doable price of €500mn, to allow them to course of lighter, non-Russian blends of crude.
“Refineries at all times function on worst-case eventualities,” stated a MOL govt. “We’ve got no shades of gray. If we are able to think about one thing we’ve got to arrange for it.”
The Adria pipeline, operated by Croatian firm Janaf, can transport about 1mn tonnes a month of oil. Deliberate extra funding to double the capability would cowl the wants of refineries in Hungary, Slovakia and Serbia, it stated.
“One of these determination needs to be made . . . according to the official power insurance policies of the EU and the Croatian authorities,” the corporate stated. “Janaf is ready to behave swiftly as soon as the choice is made.”
Hungary and Serbia final week stated they’d construct a branch connecting to the Druzhba pipeline to make sure Belgrade continues to obtain cheaper Russian crude.
Janaf has elevated its costs to pump crude to neighbours, stated folks accustomed to the matter. The bulk state-owned firm declined to reply detailed questions from the Monetary Instances, citing unspecified enterprise obligations.
The rise in LNG import capability at Omišalj to greater than twice Croatia’s annual consumption ought to enhance Zagreb’s regional function. “This may . . . really make Croatia a regional power hub,” Prime Minister Andrej Plenković stated final month.
Croatia might have already assumed a a lot larger function as a regional oil and fuel import hub had it not delayed and scaled again the development of its LNG terminal for a decade, stated András Simonyi, an power knowledgeable on the Atlantic Council’s World Power Middle.
“The Croats are very late,” Simonyi stated. “The US goes to ramp up LNG manufacturing quickly . . . the EU has additionally accepted fuel as a transition gas. So there will probably be fuel. However will there be infrastructure in Europe? No person will look ahead to Croatia, which might transfer much more fuel with larger ambitions.”
However Zagreb’s measured method, betting on a short-term resurgence in demand for fossil fuels whereas retaining a give attention to investments in inexperienced power, might but repay.
With its lengthy Adriatic shoreline, Croatia is eyeing fast growth of photo voltaic and wind energy, says Dražen Jakšić, director of Zagreb’s Hrvoje Požar Power Institute. There’s sturdy investor curiosity in backing new initiatives that will significantly enhance Croatia’s present clear energy producing capability of simply over 1GW, he added.
Julije Domac, an adviser on power to President Zoran Milanović, stated the federal government is focusing on an enlargement in solar energy capability to 7GW from 160MW, and a doubling in wind energy from the present 1GW, and dealing on regulatory and grid upgrades to allow the nation to transmit extra renewable energy,
That may allow it to satisfy its purpose to section out coal vegetation, which nonetheless present 40 per cent of its electrical energy wants, by 2033, and nonetheless have surplus energy for export, he added.
“On the finish we needs to be inexperienced electrical energy exporters,” Domac stated. “We’re ready to be that.”