Croatia says to co-finance Krk LNG terminal

ZAGREB,  (Reuters) - Croatia will co-finance a floating liquefied natural gas (LNG) terminal in the northern Adriatic with 100 million euros ($114 million), Energy and Environment Minister Tomislav Coric said.

The government has identified the planned terminal on the island of Krk as a strategic project aimed at diversifying gas imports which it currently receives from Russia.

"The terminal is worth 234 million euros. The European Union (EU) is providing 101.4 million euros and 32.4 million euros will be financed by our energy firms that lead the project. The remaining 100 million euros will be provided by the state," Coric told a cabinet session.

State power board HEP and gas pipeline operator Plinacro are in charge of implementing the project.

The EU has pledged support as part of its efforts to help EU member states diversify away from Russian energy imports in the wake of Moscow's annexation of Crimea in 2014 and its clash with Ukraine over gas.

The targeted markets for gas from the planned terminal are countries in central and southeastern Europe.

The project has struggled to secure buyers, however, with binding bids for just 0.52 billion cubic metres (bcm) of gas per year while the terminal's planned capacity is 2.5 bcm.

According to the energy and environment ministry, some Hungarian companies have also sent letters of intent for use of the terminal.

This week Coric said he believed that the terminal would become commercially viable in the coming years.

The government wants it to begin operations in early 2021.

"A terminal of that size almost completely satisfies Croatia's gas needs," Coric said.

Croatia currently consumes some 2.7 bcm of gas annually, some 40 percent of which it produces domestically.

($1 = 0.8750 euros) (Reporting by Igor Ilic; editing by Jason Neely)

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