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We are interested in booking additional capacity at the Krk LNG Terminal – interview with Marjan Vugrinec, CEO of MVM CEEnergy Croatia

MVM CEEnergy Croatia is one of the fastest-growing companies in Croatia although it’s a relatively new player in the natural gas market. It’s also the largest user of Croatia’s liquefied natural gas (LNG) terminal on the Krk island, a project of strategic importance for the security and diversification of natural gas supply in Central and South-Eastern Europe.

CEENERGYNEWS spoke with Marjan Vugrinec, CEO of MVM CEEnergy Croatia about the results of the company so far, plans for the future and how the current crisis in the energy market affected LNG trade and their operations at the Krk LNG Terminal.

“MVM CEEnergy is a new player in the natural gas market in Croatia,” starts Marjan Vugrinec revealing that the company was founded just over two years ago, in 2020 as MFGK Croatia and it was not until last year that it received its current name.

The main goal of establishing a Croatian subsidiary was to expand the presence of the MVM Group, Hungary’s largest energy holding on the regional market by achieving synergies in regional trade and benefitting from a new gas supply route that opened as the LNG terminal on the island of Krk came online.

Although the company was founded in 2020, Mr Vugrinec says that in the first few months the primary focus was to obtain all permits to start the commercial activity. As a result, MVM CEEnergy Croatia has booked capacities of 6.75 billion cubic metres (bcm) at the Krk LNG terminal for a seven-year period. Apart from MVM CEEnergy Croatia, the original bookers of long-term capacity at the facility include Croatian utility HEP and the Croatian subsidiaries of Switzerland-based trader MET Group.

The LNG Terminal started commercial operations on 1 January 2021 with a maximum yearly send-out capacity of 2.6 bcm, delivering gas to the Croatian national transmission network, connected with Hungary and Slovenia.

“We were proud of the fact that it was MVM CEEnergy Croatia that imported the first LNG cargo to Croatia,” says Mr Vugrinec.

The annual quantity we deliver through the LNG Terminal is approximately 1 billion cubic metres of gas, which makes us the largest user of the facility.

The commissioning of the Krk LNG Terminal and MVM CEEnergy’s supply contracts provided direct access to the global LNG market to Hungary with new sources and market players. It was also aligned with MVM Group’s strategic natural gas supply and route diversification and regional expansion goals.

LNG carrier Tristar Ruby arrives at the Krk terminal in Croatia on 1 January 2021. Source: LNG Croatia

“By capacity booking at the LNG Terminal, MVM Group gained direct access to resources and clients in the Croatian market, which was part of the Group’s strategy to expand to the regional market targeting six countries: Austria, Slovakia, the Czech Republic, Croatia, Serbia, Romania,” says Mr Vugrinec.

“In 2021, we delivered 9 LNG cargo and from the beginning of 2022, we delivered an additional 6 LNG cargo,” underlines Mr Vugrinec adding that they received LNG cargoes from the United States, Trinidad and Tobago, Qatar and Egypt so far.

MVM CEEnergy Croatia had a successful year behind its back. The company’s revenues for 2021 amounted to 3.59 billion Croatian kunas (478 million euros). As Mr Vugrinec explains the company’s revenues grew in parallel with the growth of gas prices, which reached record levels at the end of 2021.

Given the above results and further plans, we are also interested in booking additional capacity at the LNG Terminal, but all capacity is sold out by 30 September 2027.

Earlier this year, the terminal boosted its capacity from 2.6 bcm of gas to 2.9 bcm per year without new investment. In June, Croatian Prime Minister Andrej Plenkovic announced that the government plans to double the capacity of the Krk LNG import terminal to 6.1 bcm per year, which would go well beyond covering the domestic gas consumption of Croatia and enable the country to play a more regional gas supply role.

“In parallel with the expansion of capacities at the LNG Terminal, it will be necessary to expand the capacities of the evacuation gas pipeline from the LNG Terminal to the interior of Croatia and neighbouring countries,” points out the CEO of MVMCEEnergy Croatia.

Croatia strives to increase the regasification capacity of the Krk LNG terminal in line with Europe’s goal to slash its energy dependence on Russia. The war in Ukraine and the consecutive phase-out of the dependence on Russian gas have raised the question of alternative gas supplies. However, Mr Vuginec says that the geopolitical situation did not affect the delivery dynamics.

The war in Ukraine did not affect our business, and the supply of LNG through the terminal on Krk is running smoothly.

However, he notes that the war and the sanctions against Russia have raised awareness of the importance of diversifying energy supplies, in which LNG plays an important role.

“Demand for LNG in the world is growing so that more and more countries that have this option are deciding to build receiving LNG terminals,” he underlines.

In April, the operator of the Krk LNG Terminal has introduced a new non-standard service for the users of the Terminal, the so-called ship-to-truck service, a major progress in the operation of the terminal and in the Small Scale LNG supply of the region.

What makes the service special is that LNG is reloaded from the Floating Storage & Regasification Unit (FSRU) vessel directly to the tanks of trucks suitable for road transport.

MVM CEEnergy Croatia were the first to use the Krk LNG Terminal’s ship-to-truck service, reveals Mr Vugrinec adding that they have been active in this area from April 2022 until today and there is no shortage of customers for this type of delivery.

Ship-to-truck is a new niche in LNG delivery. With this type of delivery we can satisfy customers as well as end industrial consumers who are not connected to the transport system.

The ship-to-truck service at the Krk Terminal allows many companies operating in the surrounding countries to source LNG for their filling stations, plants and other uses from a nearby terminal, thus shortening the transport routes.

Having completed the first trading transaction in April, MVM CEEnergy Croatia plans for the long term with this new area in its portfolio and prepares transactions for the coming months.

Mr Vugrinec says that they hope that the bunkering station will be operational as soon as possible, which will improve the flexibility of delivery ship-to-truck. This possibility significantly enhances the mobility of the distribution system and MVM CEEnergy Croatia has other plans as well for the future.

“In addition to the import of LNG and ship-to-truck deliveries, we are also expanding our business on the wholesale gas market in Croatia while developing a portfolio of end customers who pick up gas at the exits from gas distribution systems,” concludes Mr Vugrinec.

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