The Serbian Energy Law, adopted in 2014 and amended in 2018, together with the by-laws, is the legal framework for procedures and conditions for activities in the oil and gas sector.
The key authorities are: Ministry of Mining and Energy, responsible for implementing the energy legal framework and the Energy Agency, the main independent regulator responsible for licensing, tariff methodologies and regulated tariffs.
The Energy Law introduces full liberalization of the gas market, and households have the right to choose suppliers. However, most households have opted for regulated tariffs.
Serbia has transposed the Third Energy Package into its legal framework, but the implementation of the acquis in this sector is not successful – the gap between the transposition of the law and its implementation is constantly widening. Although initiated, the separation of the two dominant players in the market, Srbijagas and Jugorosgaz, has still not been adequately implemented.
In particular, Jugorosgaz sought to enforce the separation and cease gas transmission activities, transferring them to a branch owned by the 100 percent owner, Jugorosgaz-Transport.
In reviewing the independence of Jugorosgaz-Transport as a system operator, the Energy Community Secretariat launched a preliminary dispute resolution procedure in July 2018 for breach of the rules for separation and certification of the Third Energy Package. The procedure is still ongoing and in April 2019 the Secretariat submitted a reasoned request to the Council of Ministers, requesting its decision on the case. A few months later, in July 2019, the Energy Agency withdrew its certification from Jugorosgaz-Transport.
When it comes to Srbijagas, the situation is also not promising. The Council of Ministers in 2016 adopted the decision that Serbia failed to separate Srbijagas in accordance with another energy package, which is a serious and persistent breach of the rules Energy Community Treaty. Since then, the design of a model of an independent transmission operator for Transportgas Serbia, which is not functionally separated from Srbijagas, has not even started.
In addition, Gastrans, a company owned by South Stream Serbia (51% Gazprom, 49% Srbijagas), in 2018 filed an application for exemption from the third-party access rules for the pipeline, which is to connect Bulgarian and Hungarian national transmission systems. In March 2019, the Energy Agency decided to exempt this interconnection from the obligation to: (i) comply with third party access rules, (ii) enforce regulated prices, and (iii) implement separation. The exemption was granted for a period of 20 years from the start of the interconnection, which should be put into service in May 2022.
Serbia has made progress in establishing a free gas market and securing competition. In September 2018, the Assembly approved the removal of the destination clause contained in the 2012 intergovernmental agreement between the Government of the Republic of Serbia and the Government of the Russian Federation for the supply of natural gas. This agreement provided that gas supplied under the agreement was intended for the Serbian market only, which was in violation of the competition law of the Energy Community.
