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Serbia’s ambitious oil refinery project: Balancing energy security and environmental concerns

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Serbia’s Minister of Mining and Energy, Dubravka Đedović Handanović, recently finalized a framework agreement with “China Energy International Group” to construct an oil processing plant in Smederevo, aimed at producing derivatives in line with EU standards. This development has sparked discussions regarding the necessity of another refinery in the country and its implications, particularly concerning existing Russian-owned refineries.

Handanović clarified that the project entails building a new, state-of-the-art refinery in Smederevo, leveraging cutting-edge technologies for oil derivative production. Given Serbia’s heavy reliance on oil imports and the need to bolster energy security, the construction of this refinery is deemed crucial. While Serbia previously had two refineries, the one in Novi Sad was rendered inoperable after sustaining severe damage during the NATO aggression in 1999.

The proposed refinery in Smederevo is seen in the broader context of regional refinery operations and market demands. Crude oil for the refinery will be transported via a new pipeline branch from Pancevo, ensuring a steady supply. Furthermore, plans for an oil pipeline linking Serbia with Thessaloniki port aim to diversify crude oil sources.

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Regarding potential concerns about circumventing sanctions on Russian-owned refineries post-Ukraine conflict, Handanović stressed that the Smederevo project is independent of Gazprom Neft, with Chinese partners leading its implementation. The initiative aligns with Serbia’s strategic energy goals and aims to enhance domestic GDP and employment.

The project’s estimated timeline spans four years for construction and commissioning, with an investment of approximately 2.4 billion euros. It is anticipated to create direct employment for 700 individuals and indirectly support around 2,400 jobs.

In terms of oil processing, the refinery will be equipped to handle both heavy and light crude oil, with agreements sought from leading global oil producers for crude supply.

Addressing concerns about transparency and debt accumulation due to agreements with China, Handanović emphasized stringent economic evaluations before investment decisions are made. She underscored China’s strategic partnership with Serbia, emphasizing collaboration in energy and mining sectors.

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Public participation will be solicited in the project’s development stages, ensuring adherence to stringent environmental standards. The government’s objective is to balance economic development with environmental preservation, fostering energy independence and progress for Serbia.

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