Croatia grants 10 Adriatic energy exploration licences

Zagreb (AFP) - The Croatian government on Friday granted three groups the rights to explore for oil and gas in the Adriatic, as part of its bid to become a key energy supplier in the region.

The consortium of Houston-based Marathon Oil and Austria's OMV was granted seven out of ten licences.

Two were awarded to INA -- which is jointly owned by the Croatian state and Hungary's MOL, while the last licence was granted to Italy's ENI and MEDOILGAS, the national hydrocarbon agency said in a statement.

The tender for a total of 29 exploration blocks ranging between 1,000 and 1,600 square kilometres (386 to 617 square miles) had attracted six bidders.

Economy Minister Ivan Vrdoljak said the estimated value of investments in the exploration activities amounted to some 523 million euros ($629 million).

Contracts are to be signed by April 2 and the exploration phase is expected to last for up to five years.

The government hopes that Croatia, which is struggling with six years of recession, could become an energy hub in region, with its gas the cheapest in the area.

But the conservative opposition and environmental lobby groups have criticised the energy exploration project, saying it is non-transparent and potentially detrimental to tourism -- a key plank of Croatia's economy.

Green lobbyists warn that the offshore drilling could have a negative impact on Croatia's stunning coast, which, with its more than 1,000 islands and islets, attracts 12 million visitors a year.

"The whole project was conducted in a very non-transparent way .... I hope that common sense would prevail," Mirela Holy, head of the ORAH left-wing green party, said Friday.

Holy, who opposed exploration of oil but not gas, said she hoped the project would be eventually implemented in line with environmental regulations, although it was not the case now.

Although no environmental impact study has been conducted to date, the economy ministry said firms carrying out drilling would need to comply with strict environmental safety regulations.