May the 20th, 2022 - The construction of the second Croatian underground gas storage facility is now underway following approximately sixteen very long years of discussions on the matter.
As Poslovni Dnevnik/Darko Bicak writes, after almost sixteen years of discussions and plans to build the second Croatian underground gas storage facility (PSP) Grubisno Polje (GP), the war in Ukraine and the ensuing energy crisis have suddenly made such strategic facilities very desirable and deeply necessary.
Although activities on the project began in parallel with the Russian attack on Ukraine back in February, the start of works on the new Croatian gas storage facility were inaugurated just a few days ago in Grubisno Polje by the new Minister of Economy and Sustainable Development, Davor Filipovic.
Unlike the existing "large" gas storage facility, PSP Okoli, with a capacity of about 550 million cubic metres of gas, PSP GP will be smaller, about 40 million m3, but it will be a flexible, or peak, storage unit.
The concession is relatively small, which in practice means that despite the large storage capacity, it will take a long time, especially if its occupancy falls below half, to release this gas into the Croatian energy system. The PSP GP will be developed in two phases and the total estimated value of the project is around 500 million kuna. It is estimated that the new Croatian gas storage facility could be in operation by the year 2027 at the very earliest.
Vlado Vlasic, the director of PSP, pointed out that currently, this project, both for PSP and for society as a whole, is the most important development and investment activity in Croatia.
"After a full 35 years since the commissioning of the storage facility in Okoli, the company PSP, as the operator of the Croatian gas storage system, is building another Croatian gas storage facility. Today, when the whole of the EU is dealing with the issue of providing people with the necessary energy sources, we're here to mark the beginning of the construction of a strategically important energy project.
Market disturbances
Over more recent years, the energy market has become very flexible through stock exchanges, enabling a secure and mostly cheap supply of gas, oil and electricity itself from global sources. As a result, strategic gas storage facilities have become questionable, as was the case here in Croatia last year.
However, situations such as Russia's aggression against Ukraine and the West's reaction to it by imposing sanctions have called the security of the supply into question, and prices have increased several times over. That said, the war in Ukraine will not last forever, and energy traders are aware of that.
Owing to all of these variables, it's almost impossible to estimate what the situation on the gas market will be by 2028, when PSP Grubisno Polje will certainly be in operation - both in terms of the security of supply and prices on the global market, and in terms of increasing energy transition in which there is less and less space for gas.
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