24 September 2015, News Wires – The Croatian government has reportedly agreed to award three offshore licences for oil and gas exploration in the Adriatic Sea to two entities, following on from onshore awards earlier this year under the Balkan country’s first licensing round.
INA, a joint venture between Croatia and Hungary’s MOL, has been handed two offshore licences – having already picked up an onshore permit – while an Italian consortium of Eni and Medoilgas has gained one licence, local publication Balkan Insight reported.
It was earlier decided to award four onshore licences to Vermilion Zagreb Exploration, a local unit of Canadian player Vermilion, and another to Nigeria-based Oando, as well as the permit for INA.
The licences cover a two-year exploration period, extendable by three years. If sufficient oil and gas volumes are found after five years, companies will have production rights for 25 years.
However, Economy Minister Ivan Vrdoljak was separately quoted as saying by news wire Bloomberg that the Zagreb government intended to postpone formal signing of licence agreements until after general elections later this year to avoid pressure from environmental groups and the opposition in the election campaign.
“We don’t want these contracts, in which we put a lot of hard work, to become fodder in the election campaign. We hope to win and sign the contracts in the first Cabinet session,” he said.
However, a delay in signing the deals may defer much-needed concession revenue for the European Union’s newest member to ease its budget deficit, as well as stall its bid to exploit indigenous oil and gas resources to lessen its dependence on Russian gas imports.
The companies are expected to invest around $1 billion during the survey and exploration phase that will boost the local shipping, construction and waste disposal industries, according to the head of Croatia’s state hydrocarbon research agency Barbara Doric.
She added the country hopes to generate “pure budget revenue” of 8 billion kuna ($1.2 billion) annually from oil and gas output over 25 years from 2020, when production is expected to start.