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China and Serbia to collaborate on oil refinery in Smederevo

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A significant collaboration between China and Serbia is on the horizon with plans to construct an oil processing plant in Smederevo, valued at 2.4 billion euros. This initiative stems from a framework agreement inked during Chinese President Xi Jinping’s visit to Serbia, as highlighted by Minister of Mining and Energy, Dubravka Handanović Đedović.

The concept of a refinery in Smederevo has been circulating for years, dating back to 2008 when the proposed American-Dutch entity “Komiko Overseas” intended to establish one. Initially, the Smederevo municipal government signed a memorandum of understanding with “Komiko oil,” an affiliate of “Komiko Overseas,” outlining plans for a refinery with a projected investment of around 250 million dollars and a three-year construction timeline. However, the project encountered setbacks in 2013 when “Komiko” failed to fulfill financial obligations, leading to its termination.

Former Serbian President Tomislav Nikolić revived discussions about the refinery, suggesting its potential realization in 2018 and reiterating this notion later. The envisioned refinery aims to adhere to EURO 6 standards, boasting zero emissions, with contributions from German and American firms in equipment production. Despite these plans, questions arise regarding market necessity, investment motives, and project feasibility.

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Goran Radosavljević, an economist and oil industry expert, underscores the regional surplus in refinery capacities, challenging the necessity for another. Furthermore, he highlights the potential geopolitical implications, suggesting Chinese interests in establishing a foothold in Europe’s energy sector via Serbia. Radosavljević emphasizes the need for clarity regarding the refinery’s output destination and underscores uncertainties in the European oil derivatives market’s long-term viability.

Amidst these deliberations, the prospect of China’s long-term strategy, coupled with Serbia’s strategic location, emerges. Should the refinery materialize, it would likely grant Chinese-produced derivatives EU recognition under trade agreements, offering a gateway into the European market. Ultimately, while the idea of a refinery in Smederevo persists, its realization hinges on various economic, geopolitical, and market dynamics.

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