Gas supplied to over 340,000 households in Serbia comes primarily from Russia, a country with which Serbia has had long-term gas supply contracts for decades.
The most recent contract, agreed upon during Russia’s invasion of Ukraine in May 2022, between Serbian President Aleksandar Vučić and Russian President Vladimir Putin, is set to expire in March 2025.
At the onset of Russia’s invasion of Ukraine, Serbia was completely dependent on Russian gas, a crucial factor behind Belgrade’s decision not to impose sanctions on Moscow.
In the meantime, following the example of many EU countries that have imposed sanctions on Russia, Serbia has started looking for alternative supply sources.
From November 1 until March 1 of the following year, Serbia will receive a daily supply of one million cubic meters of gas from Azerbaijan, as announced by Serbia’s Ministry of Mining and Energy.
The contract stipulates that Serbia will receive up to 400 million cubic meters of gas annually from Azerbaijan until 2026. However, this amount will only cover about 13% of Serbia’s needs, as the country consumes over three billion cubic meters of gas annually.
A long road to energy independence from Russia
The EU plans to completely eliminate Russian gas from the market by 2027. According to Predrag Grujičić, head of the Gas Sector at the Energy Community Secretariat (an EU regulatory body for energy), Serbia is still far from achieving this goal.
Data from Serbia’s Energy Agency (AERS), the national regulatory body, provided to RSE (Radio Free Europe/Radio Liberty), indicates that in 2023, nearly 94% of Serbia’s imported gas came from Russia.
In the first half of 2024, this percentage slightly decreased to 92%. Around 8% of Serbia’s total gas was imported from companies in Hungary, Switzerland, and Azerbaijan, according to AERS data.
“Russian supplies now make up less than 8% of the EU’s gas mix. There are many other gas sources potentially available to Serbia. Gazprom has proven to be an unreliable supplier, so new options must be explored,” Grujičić emphasizes.
According to Dragan Vlaisavljević, an energy expert from Serbia, the capacity to transit Azerbaijani gas is too small to significantly reduce Serbia’s reliance on Russian gas.
“The 400 million cubic meters of gas annually, with the possibility of an additional 400 million cubic meters per year, is the maximum that can be achieved using the current pipeline infrastructure,” Vlaisavljević explains.
Gas from Azerbaijan is being delivered to Serbia via a new pipeline with a total capacity of 1.8 billion cubic meters, which connects Serbia, via Bulgaria, to the Greek liquefied natural gas terminal in Alexandroupolis.
This is the first cross-border pipeline in Serbia not primarily owned by Russia’s Gazprom and was partially financed by non-repayable funds from the European Union.
“The dependency on Russia can only be reduced to 50% or less if Romania is included in Serbia’s energy supply equation over the next decade,” Vlaisavljević told RSE.
In August, Serbia signed an agreement with Romania to build a joint pipeline with a capacity of 1.6 billion cubic meters of gas, which is expected to be completed by 2027. This pipeline will allow Azerbaijani gas, as well as gas from other suppliers, to reach Serbia.
A transit route
The upcoming suspension of Russian gas deliveries via Ukraine to European countries, which Ukrainian authorities have announced for January 1, 2025, will make Serbia a more attractive transit route for gas coming from other countries to Southeast and Central Europe, says Predrag Grujičić of the Energy Community Secretariat.
“As we have previously indicated, Serbia should adopt measures to allow new suppliers to efficiently use gas infrastructure and implement de-monopolization measures against the dominant player,” Grujičić states.
For more than 25 years, that dominant player in Serbia has been Russia’s Gazprom, in partnership with the public enterprise Srbijagas, headed for 18 years by Dušan Bajatović, a Socialist Party of Serbia official, close to the Kremlin, and part of the coalition with the ruling Serbian Progressive Party.
Until the construction of the Serbia-Bulgaria gas interconnector, which began trial operations in December 2023, Serbia relied solely on pipelines on its territory, the majority of which are owned by Gazprom.
The Balkan Stream
Russian gas is delivered to Serbia via the Balkan Stream, a branch of the Russian-Turkish TurkStream project. Before the start of its operations in January 2021, Serbia received Russian gas through Ukraine and Hungary.
The Serbian section of TurkStream is mostly owned by Russia, and it carries only Russian gas after being exempted from EU regulations by Serbia’s Energy Agency, which would have required access to other suppliers. This decision was met with sharp criticism from the Energy Community Secretariat.
In the meantime, as reported by AERS, 10% of the pipeline’s capacity was opened to other suppliers.
“In 2023, seven companies from the EU and Switzerland, besides the pipeline owner, used the pipeline. In the first half of 2024, three companies from the EU and Switzerland utilized it,” AERS stated in a written response.
Putin calls, Vučić hesitates
Serbia imports gas from Russia under a long-term contract that, according to officials in Belgrade, offers lower prices compared to the free market.
Under the agreement reached three months after Moscow launched its invasion of Ukraine, Russia supplies Serbia with 2.2 billion cubic meters of gas annually at a preferential price ranging from $300 to $420 per 1,000 cubic meters.
Eurostat data shows that gas prices in Serbia for households and industry are among the most favorable in Southeast and Central Europe, with no planned increases by the end of the year.
Five months before the contract expires, Serbian President Aleksandar Vučić has already received a personal invitation from Russian President Vladimir Putin to negotiate a new gas deal.
Putin extended the invitation for gas talks alongside an invitation to the BRICS summit (Brazil, Russia, India, China, and South Africa), which will take place from October 22 to 24 in Kazan, Russia.
Vučić has said he will decide whether to accept Putin’s invitation by mid-October.
“We have important foreign guests at that time (during the BRICS summit),” Vučić said on September 5 when asked by reporters if he would go to Russia.
The following day, he clarified that he had “neither accepted nor rejected” Putin’s invitation.
Energy agreement with the U.S.
While Vučić is weighing Putin’s invitation to the BRICS summit, Serbia is signing agreements with the United States. In September, the two countries signed a strategic cooperation agreement in the energy sector—the first such strategic agreement between the two nations.
The agreement was signed by Serbia’s Foreign Minister Marko Đurić and U.S. Under Secretary of Energy Jose Fernandez. Đurić described the signing as an “important and responsible step toward enhancing the partnership with the U.S. and ensuring long-term energy security,” according to Voice of America (VOA).
“This is the first in what we hope will be a series of strategic agreements between Serbia and the U.S. that will improve the overall nature of our relationship. Of course, energy has broader implications, but today’s goal is to ensure long-term, stable, safe, and clean electricity for the people of Serbia in a way that is economically sustainable, keeping Serbia attractive for foreign investment,” Đurić stated briefly after the signing ceremony at the U.S. State Department.
However, the U.S.-Serbia energy agreement will not reduce Serbia’s dependence on Russian gas, as it does not cover projects involving fossil fuels, including natural gas. On the other hand, it could open doors to investments in the development of nuclear energy in Serbia, according to Serbia’s Ministry of Mining and Energy.
Renewable energy sources
Promoting U.S. private sector investment in energy projects in Serbia, with a focus on renewable energy, is the core of the Serbia-U.S. energy agreement.
The goal of the agreement, according to the Ministry, is to increase the use of clean energy and accelerate the phase-out of coal-fired power generation, ensuring safe, reliable, and diversified supply sources, potentially including base-load energy.
“If the Serbian Parliament adopts amendments to the Energy Law, thereby lifting the moratorium on nuclear energy, the agreement could open the door to cooperation in nuclear energy development,” the Ministry added.
The proposed amendments to the Energy Law would end the ban on building nuclear power plants, which has been in effect in Serbia since 1989.
(Vreme, 12.10.2024)
https://vreme.com/vesti/od-kremlja-do-vasingtona-koliko-je-srbija-daleko-od-energetske-nezavisnosti/