Reports: Croatia gets part of South Stream pipeline

24/08/2012

Croatia would likely benefit from the Gazprom-Plinacro deal through jobs, safety improvements and lower gas bills.

By Drazen Remikovic for Southeast European Times in Zagreb -- 24/08/12

Gazprom-Plinacro deal promises new jobs and lower bills in Croatia. [plinacro.hr]

After years of deliberation, the largest extractor of natural gas in the world, Russia's Gazprom, decided to build one part of the South Stream pipeline through Croatia instead of Hungary, media reported on Tuesday (August 21st).

According to daily newspaper Jutarnji List, the Russian company has agreed on the technical details with Croatian national gas company Plinacro Group for the pipeline to pass through the country. If the deal goes through, construction in Croatia would begin in 2015.

Officials from Plinacro have confirmed that negotiations with the Russian partner are ongoing, but said that they can't speak about the details of the contract.

"The national gas company … fully prepared when it comes to finance and technology to perform this job," Plinacro spokesperson Neda Erdeljac told SETimes. "With these facts, we met our Russian partners. However, the final decision on the direction of the South Stream pipeline will be up to Gazprom."

If Croatia joins the South Stream project, then the transit route would be much shorter and cost-effective. According to the current technical plan between Plinacro and Gazprom, a completely new pipeline, 270km in length, would be built through the northern part of the country.

The value of the investment would be around 600 million euros, carrying about 30 billion cubic metres of gas through Croatia annually.

Damir Novotny, an economic analyst and former member of the governors' council at the Croatian National Bank, said that the construction of the pipeline through Croatia would improve the industry and safety standards in the country.

"The construction will bring benefits to the local construction firms and also open some new jobs. Croatian industry will have safer delivery of gas. As for the final cost of gas, it will probably remain the same as in the market, but will reduce gas distribution costs, which will reduce the monthly bills for gas to citizens and businesses," Novotny told SETimes.

Zdenko Lalic, director of Montmontaza Pipeline constuction company in Zagreb, said that the domestic companies have the skilled people and machinery necessary to do the job. Local construction firms have built more than 1,000km of pipeline in the last 10 years and are hoping for South Stream.

"Croatian builders are technically the best equipped of all the countries of the former Yugoslavia," Lalic said. "The big question is whether the domestic firms will survive until 2015 because of the extremely difficult financial situation."

"One thing is certain: if the government gives us that job, we will do it without any problem," Lalic told SETimes.

Under the current project, the South Stream pipeline is 3,600km long and starts in Russia, passing under the Black Sea, entering Bulgaria, continuing through Serbia and then Croatia, where it is separated into two branches—one going to Slovenia and Austria and the other to Italy.

This content was commissioned for SETimes.com.