The Memorandum of Understanding provides for cooperation with the planned Ionian Adriatic Gas Pipeline (IAP), which promoters say will result in more supply security in South-East Europe.
Plinacron, a state-owned company, operates Croatia's natural gas pipeline system. It plans to enter the new South European markets and is promoting IAP, claiming it will bring energy security and economic benefits to the region.
IAP is a planned gas pipeline project linking Albania, Montenegro, Croatia and Bosnia and Herzegovina. It is estimated to cost an eventual €230 million.
A joint working group will be established to further evaluate areas of potential cooperation. The agreement appears to mark the outcome of an effort that was started three years ago by TAP shareholder EGL.
TAP is planning to construct a natural gas pipeline that will connect Greece with Italy, via Albania and the Adriatic Sea. The pipeline is part of the European Union-designated 'Southern Gas Corridor', which will link Caspian gas sources to Europe and provide significant reverse flow capacities. At 520km, TAP is the shortest and most cost-efficient of the proposed pipelines in the corridor (see 'Background').
TAP 'most realistic' project in the region
Jerko Jelić-Balta, president of the board of Plinacro, told EurActiv that Croatia's decision to enter into a partnership with TAP was based on assessing that the planned pipeline, which is competing with other similar projects, was "the most realistic".
Jelić-Balta said that Croatia had made headway with several gas interconnector projects, namely an interconnection with Hungary and a pipeline in the direction of the southernmost part of the country, Dalmatia, where the cities of Split and Dubrovnik are located. The new pipeline could be later connected to TAP which approaches Split, he said, adding that in 2011 Split would be effectively linked.
Regarding the IAP project, Jelić-Balta said that Croatia had initiated an intergovernmental declaration between Albania, Bosnia and Herzegovina, Montenegro and Croatia, paving the way for a feasibility study to be commissioned. Plinacro, he said, is the technical coordinator of the IAP pipeline project.
Kjetil Tungland, managing director of the Trans-Adriatic Pipeline project, said that gas from the Shah Deniz II gas field in Azerbaijan, would bring diversification to gas supplies in the region, currently dependent on imported gas from Russia. The second advantage, he stressed, is that countries in the region would for the first time become interconnected. They would be able to help each other out if necessary should Moscow decide to shut down supplies of gas.
"We are proud to be in cooperation with Plinacro, because they have been working for these ideas most professionally and with a huge dedication," he said.
Asked about the target dates for the projects, Jelić-Balta and Tungland concurred that the building of the IAP section from Dalmatia to Montenegro and then to Albania would depend on the progress of the TAP project.
If successful in obtaining a supply contract from the Shah Deniz II gas field in Azerbaijan, TAP should become operational in 2017 when the field is expected to become operational.