Montenegro will soon sign a Memorandum of Understanding with the Japanese company JERA Co. Inc., one of the world's largest energy companies, which will begin cooperation on conducting a comprehensive feasibility study for the construction of an LNG terminal and an accompanying gas-fired thermal power plant in our country.
The draft memorandum has been finalized and approved by the Government at its last session, and after the final version is agreed upon through diplomatic channels, the two countries will sign it.
This will be the second memorandum, after the first was previously signed with American companies in 2023, while the European Union has also expressed interest in supporting the implementation of this strategic project.
The current local government in Bar, led by the Mayor Dušan Raičević, and some of the citizens of Bar oppose the construction of an LNG terminal in that city.
Energy hub
This project, according to the Government of the Prime Minister Milojko Spajić, aims to improve Montenegro's energy security, diversify energy sources and create conditions for the country to become a significant energy hub in the Western Balkans, while the Japanese partner will provide cutting-edge knowledge and experience in line with international standards and decarbonization policies.
"This study should show realistic possibilities and options for further implementation of the project, including technical, economic, financial and regulatory aspects. Its preparation represents a key step in making future strategic decisions and the possible conclusion of final binding contracts," states the Government's documentation (proposed basis for conducting negotiations and concluding a memorandum of understanding between the Government and JERA).
The draft text of the Memorandum specifies that the Government will provide all necessary information and assistance so that JERA can conduct a quality study, while JERA, in addition to preparing the study, will conduct market research, talk to contractors and initiate contacts with international financial institutions, export credit agencies and commercial banks about the possibilities of financing the project. At the same time, the possibility of involving other Japanese companies and products in the implementation of the project will be considered, which would further strengthen economic cooperation between the two countries.
This project does not require additional funds from the Montenegrin budget, as financing will be provided through international partners and investors. The Memorandum is intended as a framework for cooperation and does not create legal or financial obligations until a final agreement is reached. It is envisaged that the document will be signed in Montenegrin and English, and its duration is limited to two years, after which, if the study shows positive results, binding contracts could be concluded.
"Economic relations between the two countries have so far been modest in scope, with significant potential for development, especially in the energy sector, sustainable technologies and infrastructure. Japan, as one of the world's leading economies and a country with an exceptionally developed energy sector, recognizes the importance of the Balkans as a strategic space for stability and energy transition."
In this regard, there is a clear interest of Japanese companies to invest in projects that support decarbonization and sustainable energy infrastructure. For Montenegro, intensifying cooperation with Japan opens up the possibility of diversifying sources of investment and transferring knowledge, technology and best practices. The signing of the Memorandum of Understanding with JERA, one of the largest energy companies in Japan and the world, represents a qualitative step forward in the relations between the two countries, as it goes beyond the framework of previous development and technical assistance and opens up the prospect of strategic infrastructure investments," the executive authority's documentation states.
Signature for two projects
Former Prime Minister Dritan Abazovic In May 2023, the Government signed a Memorandum of Understanding with the American companies Enerflex Energy Systems and Wethington Energy Innovation regarding the provision of support for the improvement of energy infrastructure in Montenegro, in the presence of the US Ambassador to Montenegro. Judy Rising Reinke.
"The Memorandum is an expression of the commitment of the signatory parties to initiate discussions and actions aimed at implementing two energy infrastructure projects, namely: the construction and installation of a fixed terminal for the import of liquefied natural gas into Montenegro and its further storage, regasification and transport, and the project for the construction and installation of a greenfield gas-fired thermal power plant in Montenegro, whose gas supply comes via the liquefied natural gas import terminal," the Government announced after signing this document.
Former EU Enlargement Commissioner Oliver Varhelji he announced during a meeting with Abazović in October 2023 that the EU is ready to build an LNG terminal in Montenegro in partnership with Montenegro.
He stated that the construction of the gas terminal in Bar would be of great importance for Montenegro and the region, bearing in mind the energy crisis caused by Russia's aggression against Ukraine. With its construction, Montenegro would become a hub for other countries in the region when it comes to liquefied gas.
Minister of Energy Admir Šahmanović previously stated that one of the development projects that will be the focus of his department's work is creating conditions for the construction of an LNG (liquefied natural gas) terminal in Bar.
"This project is of extremely strategic importance for Montenegro, with long-term positive effects on energy security, economy, environmental protection and regional cooperation. The LNG terminal would provide us with access to the global liquefied natural gas market, providing greater flexibility in energy supply. The Port of Bar is strategically located on the Adriatic Sea and could become a regional energy hub for the distribution of LNG to the countries of the Western Balkans and beyond. This would bring additional revenues through the transit, storage and transport of LNG, which would significantly improve the operations of the port and railway companies, as well as increase the geopolitical importance of Montenegro. The introduction of LNG technology can stimulate the development of new technologies and expertise in the field of energy in Montenegro, thereby strengthening the country's technological base and capacities. It would also create a basis for the development of a gas power plant that could potentially be an alternative to the Pljevlja TPP," said Šahmanović.
They demand that Spajić not sign the Memorandum
A group of 40 non-governmental organizations (NGOs), citizens, experts and environmental activists sent an open letter yesterday to the Government of Montenegro, Prime Minister Milojko Spajić and Minister of Energy and Mining Admir Šahmanović, calling for the suspension of the signing of the Memorandum of Understanding with the Japanese company JERA Co. Inc. Japan.
The open letter was submitted to the media by Nataša Kovačević, a civic activist and coordinator for the Western Balkans at the CEE Bankwatch Network, and Vesna Čejović, a citizen of Bar and public advocate for hundreds of citizens of Bar in the campaign against the gas power plant and LNG terminal in Bar.
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