Energy cooperation is the “weakest link” in bilateral ties between Hungary and Croatia, said the Hungarian minister of Foreign Affairs and Trade, Péter Szijjártó.
While he recognised that relations are strongest on the protection of the identity and cultural heritage of each other’s national minorities, in an interview with HINA, Minister Szijjártó also mentioned the case of the ownership of oil company INA as the bone of contention, a subject that the Croatian government has still issues with.
According to the Hungarian minister this “should not be considered an issue between the two States” and talks should be carried out with Hungarian oil and gas company MOL.
Diversifying oil supply: will the Adriatic pipeline’s capacity be increased?
In 2011, MOL increased its ownership in INA to 49.08 per cent by acquiring shares from minority shareholders. Since then, it has been the largest shareholder, followed by the government of Croatia with 44.84 per cent of shares, while the remaining 6.08 per cent are held by institutional and private investors.
More recently, after the Russian aggression on Ukraine, Zagreb has raised concerns about Budapest’s reliance on Russian fossil fuels. At the same time, Minister Szijjártó recalled that despite his country’s interest in diversifying its gas sources, Janaf, the company operating the Croatian section of the Adria pipeline, “does not have the capacities to be able to make up for a potential shutdown of the pipeline delivering oil from Russia.”
However, right after the interview, Janaf also released a statement emphasising that the company can fully meet the oil needs of Hungary, Slovakia and the Czech Republic. Furthermore, the company stated that its oil pipeline system can also replace the southern branch of the Druzhba pipeline which supplies CEE countries.
As it happens, according to a recent press briefing held by Prime Minister Viktor Orban’s chief of staff Gergely Gulyás, Hungary is ready to cooperate with Croatia to increase the capacity of the Adriatic pipeline that brings non-Russian crude to Hungary. As quoted by Reuters, Mr Gulyás said that the government had discussed its 2030 energy strategy and this would include enabling Hungarian oil and gas group MOL’s Danube refinery to process more non-Russian crude.
“We know that if there was no crude oil coming from Russia now, then shipments could only come via the sea, on the Adriatic pipeline. But the capacity of this pipeline is only 70-80 per cent of what would be needed,” Gulyás told the briefing. “So this is a project of special importance, which Hungary would like to implement together with Croatia.”
Croatia aims to become a regional energy hub
Indeed, Croatia has been promoting itself as a regional energy hub for the past couple of years. Investing in the crucial energy infrastructure, the Krk LNG terminal, Plinacro gas pipelines and Janaf oil pipelines makes it possible for Croatia to provide its neighbours with a diversified supply of energy, Prime Minister Andrej Plenković said in Brussels in June 2022.
Regarding gas supplies, during a recent government session, the government decided to increase the security of gas supply by building the Bosiljevo-Sisak-Kozarac gas pipeline, 122 kilometres worth 322 million euros and the Lučko-Zabok gas pipeline, 36 kilometres long and worth 78 million euros, both to be built by the country’s natural gas transmission system operator Plinacro.
The first project is especially important to connect, together with other pipelines already under construction, the LNG terminal on Krk island to Central and Eastern European countries, including Ukraine. Furthermore, as a continuation of the existing Hungary-Croatia interconnection, it increases the capacity of supplying gas to Hungary by up to 3.5 billion cubic metres (bcm) per year. The second gas pipeline whose construction was approved by the government, would increase gas supply to Slovenia up to 1.5 bcm per year, which roughly corresponds to the country’s peak consumption.
Croatia is also investing in storage as at the end of January, the Minister of Economy and Sustainable Development Damir Habijan, together with Prime Minister Andrej Plenković took part in the ceremony for the completion of the first phase of the construction of a second underground gas storage in Grubišno Polje. Minister Habijan underlined that this investment will strengthen not only Croatia’s gas system but also ensure sufficient quantities of natural gas to neighbouring countries. He also emphasised that new opportunities are opening up for all market participants, such as the establishment of a gas exchange in order to complete not only the infrastructure part but also improve the institutional framework with an efficient trading platform.
