“Both sides will diversify their energy supply.” This is the entire text of the eighth item in the agreement that was signed in Washington last week, and which was perceived by the public as a possible blow to the relations between Serbia and Russia.
Namely, this article is almost entirely related to gas supply, since we produce electricity for ourselves, there are no restrictions on the import of oil from anywhere, so the only thing left is to diversify the gas supply that we buy entirely from Russia.
In addition, the American administration, as well as the President of the USA, Donald Trump, mentioned earlier in his address to European countries that they should reduce their dependence on Russian gas, and a great opportunity for that is the import of American liquefied natural gas (LNG).
Even the President of Serbia, Aleksandar Vucic, stated after the signing, that “they managed to remove the provision from the agreement to commit from when and what we will buy, we did not agree to that.”
“We have a general norm here that does not pose any problem for us,” and Prime Minister Ana Brnabic pointed out that “the Americans wanted us to switch more to liquefied natural gas coming from the USA”.
So, the American president wanted to sell a little gas with the economic cooperation between Serbia and Kosovo and Metohija, but apparently there is nothing of that.
As energy experts say for Danas, at this moment there is no possibility for American gas to enter Serbia, but not only that, there is not much chance that we will buy any gas that is not from Russia.
Currently, natural gas enters Serbia only through a gas pipeline from Hungary that transports Russian gas.
An alternative to this gas pipeline is the Turkish Stream, which started last year and should be completed this year, which should be delivered from Bulgaria – again Russian gas.
In this way, the supply is diversified, because the situation from ten years ago cannot be repeated, when in the middle of winter, Russia turned off the taps to Ukraine due to non-payment, and then to the rest of Europe, including us. However, this does not reduce supplier dependence. It is still Russia.
So let’s see what the alternatives to Russian gas are.
There are currently only a few liquefied natural gas reception terminals in Europe coming from the US and they are all quite far from us, except for two future terminals that are under construction.
One is on the island of Krk in Croatia, which should start working next year, and the other is in Greece, in Alexandroupoli, near the Turkish and Bulgarian borders, which according to the announcements should be completed at the end of 2022.
Another alternative is the Trans-Anatolian Gas Pipeline (TANAP) and the Trans-Adriatic Gas Pipeline (TAP) through which gas may possibly flow from Azerbaijan or some other destination.
Vojislav Vuletic, Secretary General of the Gas Association, claims that the stories about the purchase of American gas are just that – stories.
“The terminal in Alexandroupoli has not been built, and when and if it will, remains to be seen. American gas has nowhere to enter Serbia. Other terminals are located in Poland, Lithuania and Portugal. Capacity building for liquefied gas reception is expensive and time consuming. For example, the Romanians found gas in the Black Sea, but they have not started extracting it yet, because a lot of things have to be done before the exploitation starts. And in the end, even if there is a place to enter, there is no American gas. In the United States, there are six plants in which natural gas is liquefied and loaded on tankers with a maximum capacity of about 65 billion cubic meters per year. What is it for Europe whose needs are 500 billion cubic meters a year? So far, only one LNG tanker has arrived at the terminals in Poland, Lithuania and Portugal,” notes Vuletic.
Energy expert Milos Zdravkovic points out that diversification is good, because it increases competition and that is always useful for the buyer, but that in this case there is not much chance that it will happen.
“That story about American liquefied gas is on a long stick. The terminal on Krk is 2.5 billion cubic meters a year, which is not enough for Croatia itself, and the entire capacity is sold out by 2022. That item is more declarative for the needs of Trump’s election campaign. In the end, that gas will always be more expensive than Russian, because its transport to the terminals in the USA, liquefaction, then transport across the Atlantic on tankers and then return to the gaseous state at terminals in Europe, costs a lot and requires a lot of energy. Some time ago, John McCain then told the Prime Minister of the United Kingdom, Corbyn, that they had to buy LNG from them, and he replied that it would never be as cheap as Russian gas. McCain’s response was “Freedom has a price”. So, gas is a political issue first of all,” Zdravkovic estimates.
By the way, in June, Bulgaria bought a 20% stake in the LNG terminal in Greece and committed to buying certain quantities of gas. Both the terminal in Alexandroupoli and Krk are largely funded by EU funds.
In Croatia, about 100 million euros arrived from European funds for this project, and while for the terminal in Greece, with a capacity of five billion cubic meters per year, which costs about 383 million euros, the EU will provide half of the funds.
So there is still gas that is delivered to Turkey from the Shah Deniz 2 gas field in Turkey via the TANAP gas pipeline.
However, Zdravkovic explains that the pipeline, with a capacity of just under 20 billion cubic meters a year, has been completely sold out. Also, according to him, the Trans-Adriatic gas pipeline, although it has not been built yet, the gas that flows from it is already determined by the customers.
“There is also that Levantine gas from the fields around Cyprus, around the research of which there are many problems between the Turks and the Greeks,” he notes.
The story about the gas pipeline that would deliver gas to Serbia via Kosovo, which was mentioned in 2017, has revived in the public.
It is about the TAP gas pipeline that goes through Albania, and Zdravkovic points out that it takes about ten years to build a new gas pipeline while projects are done, financing is provided, etc., and in the end the question is which gas would come at all.
“This was more support for Trump in the campaign than a serious intention to buy gas from the United States,” Zdravkovic concluded, Danas reports.
