Gazprom Plans Expansion in Croatia With Pipe, Power Plant

OAO Gazprom (GAZP), Russia’s natural-gas export monopoly, intends to build a pipeline to Croatia and a power plant in the country to maintain its market for the fuel.

The gas link, to be developed with local partner Plinacro d.o.o., will branch off from Russia’s planned South Stream pipeline, Gazprom Deputy Chief Executive Officer Alexander Medvedev said today in Zagreb, the Balkan country’s capital.

“We intend not only to supply gas, but also to develop the gas market, and one of the ways is to build gas-powered electric plants,” Medvedev said.

Gazprom plans to add pipes and power stations in Europe to keep market share in the continent as slowing economic growth curbs demand and competition for customers increases. The Moscow-based producer has largely relied on piped fuel even as global output of liquefied natural gas expands.

Gazprom and Plinacro will build a connector with capacity to carry 2.7 billion cubic meters a year, Mladen Antunovic, head of Plinacro, said today in an interview. The pipeline, costing an estimated 60 million euros ($80 million) to build, may start operating in December 2016, he said.

Gazprom, the world’s biggest gas producer, and partners Eni SpA (ENI), Wintershall AG and Electricite de France SA, started work last month on the South Stream pipe, which will run from Russia under the Black Sea to eastern and southern Europe. The project is scheduled to start delivering gas at the end of 2015 and reach capacity of 63 billion cubic meters a year in 2019.

Electric Plants

Gazprom’s plans to build a power station in Croatia may focus on Osijek, in the east of the country, Medvedev said. The company would construct a 500-megawatt plant in cooperation with local utility Hrvatska Elektropriveda DD, he said.

“We are also ready to invest into electric power plants in Croatia, and we are ready to sign contracts for direct supply of our gas to such plants,” Gazprom CEO Alexey Miller said today after meeting with Croatian Deputy Prime Minister Vesna Pusic.

Gazprom is also interested in participating in tenders for oil exploration in Croatia, Miller said.

A joint company for the construction of the gas pipeline to Croatia will be set up in the second half of the year, Gazprom said in an e-mailed statement today.

To contact the reporters on this story: Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net; Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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