Croatia - International Special Reports

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Croatian port and pipeline system perfectly situated for deliveries of Russian and Caspian Sea oil to the West

Croatia is attempting to make use of its advantageous geographic setting in order to become a link in the on going international development plan for Caspian Sea oil. Ideally, for Croatia, Caspian Sea oil would be transported through Romania, Yugoslavia then on across Croatia to the Adriatic and the loading facilities at Omisalj on the island of Krk.

This particular course, called the South East European Line (SEEL) is developing with the support of the European Union.

JANAF, the Zagreb based Croatian pipeline company that would be in charge of transporting the Caspian Sea oil through Croatia, has been gearing up for this and other projects which will take advantage of Croatia’s strategic location. There is also the possibility that a more northern route for the Caspian Sea oil transfer may be chosen- a route taking it through Slovenia and on to Trieste, Italy. According to Ms. Vesna Trnokop-Tanta, CEO of JANAF, "We are open to negotiations with the European Pipeline System, centered in Italy and Austria, about connecting up with them with another 100 kilometer long pipeline from Trieste to Omisalj."

One reason for doing this is that the port of Omisalj boasts several advantages over Trieste and other ports in the region. "We can load and unload at Omisalj year around and during all weather conditions," Tanta states. "The depth of the sea is around 30 meters so tankers of 500,000 tons could come."

The feasibility study being conducted, in order to determine the best route for delivery of the oil, should take from one to two years to complete.

Another large project that JANAF is keeping its eye on is one that would bring Russian crude oil to the world market by using the existing pipeline system. This enormous project would transport Siberian oil across Russia, through Belarus, Ukraine, Slovakia, Hungary and Croatia.

"For this project we will have to reconstruct our pipeline system," says the JANAF CEO. This would be necessary because the existing pipeline is designed to flow from the Adriatic eastward across Croatia, whereas the exportation of the Russian oil would have to travel to the west. It will cost about $20 million to reconstruct the existing line in order to handle the reverse flow.

"We are expecting that the first drop from this project will be realized by the end of next year," Tanta states. "This will help us to reach our capacity, and to have a better position in this part of Europe. We would like to be the link between the East and the West."

"I was very happy when (US Ambassador) Lawrence Rossin was visiting our facilities recently and recognized our company."

JANAF, as a public company, is obliged to make their acquisition of materials according to World Bank procedures. JANAF’s main partners come from Europe and America so "This procurement- the buying of the pipe, the spare parts, etc. is done in a transparent manner," says Ms. Tanta.

JANAF’s existing pipeline was initially financed back in 1979 by the World Bank, but the $20 million that are needed to secure the reverse flow capabilities of the Russian oil project will be financed by JANAF and several commercial banks.

When the Caspian Sea project gets moving JANAF will most likely work in some form or fashion with the American oil service industry. One American firm, Parsons, among the world's largest engineering, procurement and construction organizations, is already involved in the feasibility study.

"We would like to be a very important player between the East and the West," said Tanta. "We think that we have the strength and the possibilities for realizing that."