A Croatian hub

“We'd like to become a regional energy hub," explains the Minister of Finance, Marko Primorac, speaking in his office in Zagreb. “This will allow us to reduce our dependence on Russian gas in particular, by diversifying our supplies. This way, we will develop a profitable project. This investment is all the more essential for Croatia, because national gas production, which was once significant, continues to decrease," he says.

"The second phase of our investment has been planned for a long time. Its aim was to increase import capacity, but because clients weren’t interested enough, it couldn’t be launched."

But gas exports from Russia collapsed last year, and as a result, everything started to move quickly, and customers became more interested in Croatia, Hungary and Slovenia. “All our capacities are booked until 2020," says Ivan Fugas, director of operations at LNG Croatia.

“We have no problem securing the necessary volumes that would make the project profitable," Primorac adds.

Reversing flows

“Croatia was historically the culminating point of all European gas networks. We were far at the end of the map,” recalls Ivan Fugas. “Today, however, the flows are reversed. And we will be the ones at the entry points. For the first time in its history, Croatia will become a net gas exporter. Even if the large majority of that gas would have been imported in the first place."

Croatia is not the only country that sees its role changing because of the energy crisis shaking Europe. Many other coastal European countries have entered the LNG race.

The EU imported 100 million metric tonnes of LNG in 2022 to replace Russian gas — 50% more than the previous year. “It is a real paradigm shift,” observes Phuc-Vinh Nguyen, who works at the Institut Jacques Delores, a Paris-based thinktank. “Thanks to LNG, we are witnessing a diversification and globalization of our gas supplies. The landscape is being totally redesigned.”

The import terminals in Spain and Portugal, half empty before the war in Ukraine, are now running at full capacity. The four French terminals on the North Sea, the Atlantic Sea and the Mediterranean are busier than ever. And a fifth terminal is expected to be moored in fall 2023 in the port of Le Havre, on the English Channel. It will be floating, like in Croatia.

Greece’s revenge

On the other side of the Mediterranean, Greece expects to launch two new import terminals just like the one in Krk. “Athens is taking revenge on Berlin,” explains Thierry Bros, a professor at Sciences Po in Paris. “Germany thought they would be a European hub gas, thanks to the Nord Stream 1 and 2 pipelines, which directly connect to Russia and pass under the Baltic Sea. But it’s Greece that is actually becoming that European gas hub. Of course, it is not on the same scale, but Greece is still providing Bulgaria, which is now deprived of Russian gas."

But Germany hasn’t gone away. The industrial powerhouse depended completely on Russian gas to feed production, and before the war in Ukraine, Germany — the largest economy in Europe — had no LNG import infrastructure of its own. It immediately began installing floating terminals like those in Krk or Le Havre, as well as land-based terminals with greater capacity — and greater cost.

In a sign of the changing times, in Dec. 2022 Chancellor Olaf Scholz officially opened the new Wilhelmshaven terminal, near Bremen in northern Germany. This highlights the fact that the era is changing.

West to east

“From Saint-Nazaire to Wilhelmshaven, from the major Belgian ports to the biggest Dutch harbors, the seaboard of northwestern Europe is becoming the main entry point for gas, replacing the Russian gas pipelines, which are now practically unused,” explains Marc-Antoine Eyl-Mazzega, director of the Energy Center of the French Institute of International Relations. Gas flows are disrupted, he says: “Traffic was once mainly moving from the east to the west. Now, the flow goes from the west to the east and to the center of Europe. Another one goes from the southern Mediterranean to the north.”

This reversal is visible in France. Last fall, the country started exporting gas to Germany, thanks to the strengthening of their border, through interconnection in Moselle. Before the Ukraine invasion, things were different: France generally imported Russian gas after it transited through Germany.

The United States remains the main supplier of LNG to the old continent. Without a doubt, the U.S. has come out as the big winner in this reshuffling of the deck — even though Vladimir Putin might be the one responsible for it all. “Since Donald Trump’s presidency, Washington has been pushing European countries like Germany, Greece and Croatia to develop their LNG import capacities, in order to reduce their dependency to Russia,” says Eyl-Mazzega. “The war in Ukraine confirmed how relevant these investments were."

Climate objectives

This increase in gas capacity has come at a steep cost: European countries have spent an estimated €7 billion over the past year, according to U.S.-based organization Global Energy Monitor. This is the price to ensure Europe’s energy security and maintain its competitive edge against American and Middle Eastern competitors, who still have access to cheaper energy.

But some are starting to worry about this frenetic pace of investment. For Global Energy Monitor, the investment in the new terminals may lock Europe into maintaining its current level of fossil fuel consumption — presenting a risk to EU climate objectives.

“In the short term, this doesn’t really modify the demand for gas, as LNG is just a substitute for the missing Russian gas,” explains Nguyen. And the floating terminals can eventually be sent elsewhere in the world, if Europe meets its climate objectives and significantly reduces gas consumption.

Russia’s future

But all of those investments present a risk, Nguyen says. If European countries can't coordinate their substantial investments, high demand for import terminals could prevent less-wealthy countries from accessing non-Russian gas. “This could encourage disadvantaged countries to start using Russian gas again, once the war is over,” he warns.

Although many are hesitant to discuss Russia’s return to the international community, when the war inevitably ends, some have suggested that it will be impossible not to welcome Russian gas — which is, in normal times, much cheaper than LNG.

Boris Martic, the captain of LNG Croatia, says he has no illusions: “All wars end, and when this one ends, Russia will send gas again." And when that happens, Croatia’s LNG will have to cast off and say goodbye to the island of Krk.