Former Minister of Mining and Energy, Zorana Mihajlović, in an interview with RSE, assessed the establishment of a joint company between Serbia and Hungary as non-transparent.
“As far as business transparency is concerned, wherever Srbijagas is, there is no such transparency. And that is one of the reasons why basically no one knows exactly what the cooperation between Srbijagas and the Hungarian company should look like,” said Mihajlović. She believes that it is bad for Serbia that she is a minority owner in a joint company.
Also, according to her, a better option for Serbia and its citizens than renting a gas storage facility in Hungary would be to build its own or to expand the existing one in Banatski Dvor.
“Unfortunately, in previous years, no matter how much we insisted that he start building his gas storage, for example, to expand the Banatski Dvor, for which it was well known that from the 360 million cubic meters, as purchased in 2008, it should be expanded to 860, it never it was not done,” Mihajlovic said. With its own gas storage, Serbia would, she estimated, ensure security of gas supply.
Despite efforts to diversify sources of supply, Serbia is still an unsafe country, Mihajlovic says, because it is still dependent on Russia.
“Serbia really has two gas supply routes and that is not in dispute, but it has the same supplier (Russian Gazprom, author’s note). Even in this geopolitical situation, this is not a special advantage for Serbia,” concluded Mihajlović.
How does gas connect Serbia and Hungary?
The gas reaches Hungary partly via Serbia, through the Balkan Stream, a branch of the Russian gas pipeline Turk Stream, which stretches from the Bulgarian to the Hungarian border. Part of the gas, on the other hand, enters Serbia from Hungary.
Before the commissioning of the Turkish Stream section through Serbia at the beginning of 2021, all volumes of Russian gas came from the direction of Ukraine, via Hungary and Romania. Since October of the same year, Hungary and Croatia, countries of the European Union, have been receiving Turkish Stream gas from Russia from Gazprom. Gazprom is not under EU sanctions.
The gas pipeline route goes from Russia, across the Black Sea to Turkey and further to Bulgaria, Serbia and Hungary. The project itself is part of Russia’s long-term ambition to minimize gas transport through Ukraine. Serbia currently does not export gas. It is a transit country for Russian gas, except for Hungary, and for Bosnia and Herzegovina.
Where does Serbia currently get its gas from?
The war in Ukraine found Serbia completely dependent on Russian gas.
Today, according to data from the Energy Agency of Serbia (AERS), two-thirds of the gas comes from Russia, through the Turkish Stream. A small part Is provided through exploitation in Serbia, while the rest of the necessary quantities are imported from other countries. The AERS report does not specify which countries are involved.
Searching for new sources of supply
Serbia’s decades-long dependence on Russia in energy has not been damaged even after the Russian invasion of Ukraine.
The dependence on Russian gas was one of the arguments of the official Belgrade for not imposing sanctions on Moscow, despite the calls of the European Union, whose membership it aspires, to harmonize its foreign and security policy with the European one.
However, with the war in Ukraine and the energy crisis it led to, the efforts of the authorities in Belgrade to diversify sources of supply, that is, to turn to other suppliers, intensified.
Following the example of the European Union countries, Serbia turned to Azerbaijan. Thus, less than three months after the start of the Russian invasion in June 2022, the representatives of Serbia and Azerbaijan signed an agreement on cooperation in the field of energy.
In order for gas from Azerbaijan to reach radiators in households in Serbia, it is necessary that the gas interconnector Serbia-Bulgaria be put into operation. The project is financially supported by the EU. Through this gas pipeline, Serbia will be connected to Greece via Bulgaria, from where it will be able to buy gas from Azerbaijan, as well as from other providers on the market.
The length of the gas pipeline on the territory of Serbia is 109 km, and the capacity is 1.8 billion cubic meters in the direction towards Serbia. The value of the works on the construction of the gas pipeline is about 90 million euros. The EU provided 49.6 million euros as non-reimbursable aid to Serbia.
The rest will be compensated through a loan from the European Investment Bank (EIB), and Srbijagas will participate in the financing. Gas prices in Serbia and Hungary are among the lowest in the EU, according to data from Eurostat, the EU statistics agency.
Gas storage and construction of oil pipelines
Serbia and Hungary already have developed cooperation in the matter of gas storage. The agreement was signed in Belgrade in June 2022. Serbia is forced to rent a warehouse in neighboring Hungary, because it does not have enough space of its own.
Officials have been announcing the expansion of the only warehouse on the territory of Serbia, Banatski Dvor, for years, but the project has not been completed. At the same time, Serbia does not even use the entire capacity of its warehouse, because half of the ownership is held by the Russian Gazprom.
The plan is also to build an oil pipeline to Hungary that would deliver crude oil from Russia to Serbia, after it was prevented due to EU sanctions to transport it through the Croatian JANAF pipeline.
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