Croatia Hopes for Exploration in the Adriatic
Croatia has opened discussions with parties interested in oil and gas exploration projects in the Croatian section of the Adriatic Sea.
Speaking to Bloomberg, Croatian Economy Minister Ivan Vrdoljak said that Exxon Mobil, ConocoPhillips and General Electric were awaiting passage a new law on hydrocarbons research before committing to undertake any projects.
Development of oil and gas in Croatia has faced constraints given the present legal framework. The current Mining Act regulates the exploration and exploitation of all mineral reserves, including hydrocarbons. This has proven to be ineffective because hydrocarbons exploration and exploitation requires a different approach than the mining of other minerals. Furthermore, the legal gaps in the existing Mining Act have led to different interpretations, and consequently problems in its application, which turned potential investors away.
In December 2011 the government announced a tender for exploration permits in 14 areas in northern Croatia, but the tender was annulled shortly afterwards because the tender terms did not facilitate free competition. In order to launch a new tendering process for exploration permits in the aforementioned 14 areas in northern Croatia and other exploration areas, especially in central and southern Adriatic, the Ministry of Economy is eager to pass a new act which would facilitate the tendering process.
The law, expected to be passed in June, would give priority to those companies involved in exploration to develop the field. INA Industrija Nafte d.d., Croatia’s largest refiner controlled by Hungary’s Mol Nyrt., so far has had a monopoly on gas and oil exploration in Croatia.
An October 2011 forecast by state transmission system operator Plinacro d.o.o. forecast in 2011 that gas consumption in former Yugoslavia and Albania will reach 11bn cubic meters a year by 2020.
Gazprom and Plinacro have signed a pact to implement the South Stream project in Croatia between 2013 and 2016. The document envisages that a joint project company for building a gas branch to Croatia will be set up at the beginning of the second half of 2013.
Related Reading: Croatia: Preparing the Energy Market for EU Accession