Croatia has the potential to significantly increase domestic gas production

This year, the concerning trend of declining hydrocarbon production in Croatia has finally been halted. Five years ago, INA Grupa supplied 30 % of domestic demand, but today that figure stands at 1.7 million cubic meters per day or 24 %. However, confirmed hydrocarbon reserves indicate that onshore production and in the Adriatic can be doubled, which would require investments of around 200 million dollars in the Adriatic and 120 million dollars in the Pannonian region of Croatia.

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According to Josip Bubnic from INA, the potential is there. However, the question is whether the process can be sped up. It takes three to four years to secure permits and one year for construction, so it takes seven years from the start of the process to reach trial exploitation and obtain operational permits. INA is seeking changes to make the permitting process more transparent and predictable, with deadlines for both investors and regulators.

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Bubnic mentioned that the entire process could take as little as three years to reach trial exploitation. In this way, INA could increase production by 35 % in five years, benefiting not only through increased energy independence, but also through higher royalty payments, fees, taxes and job creation. Alongside INA, Vermillion Energy has four commercial discoveries in the Sava 7 block, and Aspect Croatia has two discoveries in the Sava 6 block. The gas from these fields is expected to be processed at INA’s facilities.

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Marko Blazevic from HEP Trgovina stated that gas consumption in the first three quarters of this year was reduced by as much as 14.8 % from the average of 19.3 GWh, and he doesn’t see any indicators that could drive consumption up. The European Union is currently consuming a quarter less gas than during the COVID-19 period of 2019-2021, which is a worrying sign. The Okoli gas storage facility is 91 % full and the entire gas infrastructure is fully prepared for the heating season. A mild winter is expected, and consumption is anticipated to be low, which should prevent the depletion of storage facilities. This winter will also see the end of gas supplies via Ukraine starting from 1 January 2025, but this is not expected to significantly impact supply security, as the continent is well supplied from maritime routes, including the TurkStream pipeline delivering Russian gas.

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Ivana Pek Lu?i? , a member of the PPD Management Board, stated that according to the reference scenario for this winter, European gas storage levels are expected to remain at 59 % by the end of March, with LNG and Norway as the main supply sources. She discussed the macro picture of the gas market, noting that in a scenario of a complete halt in Russian supply, storage levels would remain at 41 % based on five-year average consumption. However, if there is a complete halt in Russian supply along with reduced LNG inflows and continued consumption decline, storage levels could drop to a worrying 11 %.

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It was expected that the market would reach an oversupply of gas, but this did not happen due to delays in new projects and supply disruptions. Europe is now competing with Asia, which pays better prices. Hungary has become a gas hub with increasing liquidity, while Austria and Slovakia are in the most difficult position as they are far from alternative supply routes to replace Russian gas from Ukraine. Nevertheless, there will be no shortage of capacity, and there are no indicators of a price situation similar to the disastrous year of 2022.

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Regarding infrastructure, Ivan Fuga? , the head of LNG Hrvatska, emphasized that the terminal is responsible for 71 % of gas supply, while interconnections fell to just 2.7 % in the 2023/24 season. The terminal received 4.15 million cubic meters of liquefied natural gas, with 64 % coming from the United States, followed by Trinidad and Tobago, Algeria and Spain. A total of 2.5 billion cubic meters of gas was transported from the terminal into the gas system. The terminal is seeing an increase in ship-to-truck operations, with an average of 28 LNG carriers docking annually.

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The installation of a new regasification module, which will increase the terminal's capacity to 400,000-410,000 cubic meters per hour, or 6.1 billion cubic meters per year, is proceeding as planned. The module installation is expected in September or October 2025, with operational startup expected in November of the following year. Further development of the terminal will depend on the expansion of the transport system toward Hungary and Slovenia.

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Plinacro’s investment cycle, valued at 533 million euros, is progressing well. The main gas pipeline from Zlobin to Bosiljevo is under construction, with commissioning expected in the second quarter of 2025. Equipment and pipes have been contracted for the Lucko-Zabok section, and construction work is being procured, while equipment and pipes have been contracted for the Bosiljevo-Sisak-Kozarac section. Once these pipelines are completed, gas export capacity to Slovenia will increase from 0.26 billion cubic meters to 1.5 billion cubic meters, and to Hungary from 1.7 billion cubic meters to 3.5 billion cubic meters.

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