The New Age of Hungary’s Natural Gas Supply: Croatia’s Krk LNG Terminal is Commissioned with MFGK’s First LNG Cargo

The first liquefied natural gas (LNG) cargo was successfully unloaded at Croatia's Krk LNG regasification terminal (Krk LNG Terminal, Krk LNG). The cargo was delivered for member of MVM Group Hungarian Gas Trade Ltd's (MFGK) Croatian subsidiary MFGK Croatia d.o.o. The docking of the 12 year-old, 289 m long and 44 m wide LNG tanker of 155,000 m³ LNG capacity Tristar Ruby at Krk LNG Terminal on January 1, 2021 with its LNG cargo equivalent of 91 million m³ natural gas marked the commercial commissioning of the facility, which is considered to be a new natural gas supply route of strategic significance for Hungary and Croatia as well as the start of MFGK's involvement in the Krk LNG Terminal.

The first LNG cargo delivered on Tristar Ruby to Krk LNG is the first element of the package of agreements signed on June 5, 2020 by MFGK which includes a total of 6.75 billion m³ regasification capacity booking at Krk LNG Terminal and related LNG supply contracts for the period of nearly 7 years starting on January 1, 2021.

The commissioning of Krk LNG Terminal and the start of LNG supply open a new age in Hungary's natural gas supply. The Krk LNG Terminal and MFGK's supply contracts provide real natural gas supply and route diversification for Hungary since it got into commercial connection with the globalizing LNG market through MFGK and now has direct access to natural gas sources and market players previously unavailable in the Hungarian and regional markets. LNG procured by MFGK at the Krk Terminal is exclusively sourced from Western European market players.

MFGK's involvement in Krk LNG is also in line with MVM Group's strategic natural gas supply and route diversification and regional expansion goals. Being one of the largest conglomerate in Central and Eastern Europe with presence in nearly all components of the electricity and natural gas value chains, from power generation until customer services and from electricity transmission until natural gas storage, MVM Group is the main guarantor of Hungary's energy security. With supplying LNG via the Krk LNG Terminal MVM Group can contribute to the Hungarian and regional security of supply endeavors to an even greater extent. Furthermore, MFGK's involvement in Krk LNG also fits into MVM's regional growth strategy targeting six countries (Austria, Slovakia, Czechia, Croatia, Serbia, Romania), since besides its capacity booking and supply contracts at Krk LNG MVM Group directly enters the Croatian natural gas market through MFGK's s local subsidiary, established in 2020.

Secure and diversified natural gas supply is an economic, strategic and national security issue for Hungary. The implementation of the LNG regasification terminal on Krk Island of Croatia with its annual capacity of 2.6 cubic meters and its commissioning on January 1, 2021 are of particular interest for Hungary, since Krk LNG brings the opportunity of accessing the globalizing LNG market to a geographical proximity. Hungarian involvement in Krk LNG is considered a priority by the Government, which is also explicitly reflected in the new National Energy Strategy.

Krk LNG fits into European Union's (EU) endeavors of diversifying natural gas supply sources and routes, as the terminal is one of the endpoints of the North-South Gas Corridor, one of the priority projects of Central and South Eastern Europe energy connectivity (CESEC) initiative, furthermore it is also in line with EU strategy for liquefied natural gas and gas storage of 2016. The EU supported the implementation of the terminal with 101.4 million EUR funds from the Connecting Europe Facility (CEF).

The first, commissioning LNG cargo at the Croatian Krk LNG Terminal which was delivered for a Hungarian market player tops off the multiannual Croatian-Hungarian cooperation aimed at strengthening regional natural gas security of supply and serves as a worthy symbol of Croatia's and Hungary's jointly achieved success.