Croatia's gas transmission system operator Plinacro and Russia's gas giant Gazprom on Thursday signed a plan of activities on a project for a pipeline branch of the future South Stream gas route passing through Croatia, which is to be constructed from 2013 to 2016.
The plan foresees the founding of the South Stream Croatia company with equal stakes by both the gas companies that will construct a pipeline from Sotin on the border with Serbia, along the Janaf pipeline, to Slobodonica on the outskirts of the eastern Croatian town of Slavonski Brod.
The construction of the 100-kilometre-long two-way branch line will secure an annual capacity of 2.7 billion cubic metres of gas. The investment and construction is estimated to cost 60 million euros.
This is a project with an annual investment return rate of 8% as Gazprom Export intends to lease the entire capacity of the pipeline, Plinacro's CEO Mladen Antunovic said at the signing ceremony.
Plinacro is to invest 10 million euros into the project while the remainder will be financed with loans to be taken by the joint company.
The new pipeline should secure sufficient gas supplies to Croatia alongside two existing importing canals through Hungary and Slovenia, he said.
The South Stream branch is connected to Serbia and Russia which will facilitate cheaper gas supplies for industry and households, said Antunovic.
Construction of the pipeline should be completed by December 2016.
Gazprom Deputy CEO and Gazprom Export Director General Alexander Medvedev said that the new pipeline was one of the priorities for Gazprom's plans of cooperation with Croatia.
Medvedev said that Gazprom was interested in other projects in Croatia, possibly the construction of a gas thermal power plant and the distribution of electricity in cooperation with Croatia's electricity supplier HEP. We will be in a position to talk about this toward the end of the year, he said.
Croatian Economy Minister Ivan Vrdoljak emphasised that Gazprom's arrival in Croatia showed that Croatia had a position in large energy projects. The greatest benefit of Gazprom's arrival was secure gas supplies at the lowest prices possible, he added.
Over the past few years the competitiveness of Croatia's industry has been burdened with the high price of gas supplies and it is vital to open the door to those who can help control prices, he said.
Gazprom's delegation will meet with President Ivo Josipovic later in the day and Medvedev said that he expected full support for the future the Gazprom and Plinacro initiatives.
