Serbia is threatened by even more “peppery” prices of imported electricity

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The refusal of the Russian state company Gazprom to deliver additional quantities of “blue energy” to the countries of the European Union to fill the underground storages could cause a new jump in the prices of gas and electricity on the Old Continent.

Considering that Serbia is supplied with Russian gas on the basis of a long-term contract with Gazprom, higher prices of that energy on the stock exchanges in Europe would not endanger it, but that does not apply to electricity that it is currently forced to import due to insufficient production in the country. Namely, in the countries of Western Europe, significant amounts of electricity are obtained from gas power plants, and in the case of shortages and instability, this significantly affects the growth of its price.

According to Josep Borrell, the High Representative of the European Union for Foreign Affairs and Security Policy, although Russia is fulfilling its contractual obligations on gas supply, it has refused to deliver additional quantities to fill storages in Europe. By the way, “blue energy” from Russia meets 40 percent of the needs of gas consumers in the European Union, so their concern is understandable whether they will be faced with its shortage again.

– Energy prices have risen due to global supply and demand problems. Gas prices in the European Union are six to ten times higher than a year ago, which creates more pressure on electricity prices due to the way they are determined on the European market, Borelj said, adding that difficulties with gas supplies in Europe were caused by the crisis in relations with Russia. ”

In January 2021, there were about 60 billion cubic meters of gas in warehouses in Europe, which is a 52 percent occupancy rate. Compared to the same period this year, the amount of gas dropped to 42 billion cubic meters, and the occupancy rate in January was 37.5 percent. Experts explain that the colder winter season than expected and the increased demand for energy have led to greater gas use. Reduced quantities of gas that Russia sends to Europe via Ukraine and lower production in hydroelectric power plants have also affected the amount of gas in storage. It is feared that there could be additional difficulties in the supply of “blue energy” due to the tense relations between Russia and Ukraine, which are speculated that they could turn into a war.

Official Moscow, on the other hand, is of the opinion that Gazprom is settling all its obligations to EU countries and that they receive exactly as much gas as they asked for. When it comes to additional quantities, they will have to wait for them until Gazprom provides them. The Russian side also claims that the guarantee that Europe will always have sufficient quantities of gas would be the commissioning of the “North Stream 2” gas pipeline, which was built but has not yet received a use permit. Analysts speculate that politics is behind everything, ie that due to the crisis around Ukraine, but also the position of the German Greens who are part of the new coalition government, permits are not coming, and that Moscow is responding by not wanting to approve additional gas required by the European Union.

– Russia delivers gas to the countries of the European Union in the quantity in which they ordered it. As for the additional quantities, they will also receive them, but they cannot count on that at this moment. In order to enable that, Gazprom must redistribute the quantities of gas at its disposal and redirect certain quantities intended for other destinations to Europe. It takes time. It is important to emphasize that the countries of the European Union do not need that gas for consumption. They have enough of him. They want to make stocks in their gas storages, but the objective situation is such that they will have to wait for that – Vojislav Vuletić, Secretary General of the Gas Association of Serbia, told Danas.

He adds that the price of gas is already high and that the current situation can increase it or keep it at a high level, and that the responsibility for that lies with the speculators on the stock exchanges, who are most deserving of that.

– Serbia will not have problems with a possible increase in gas prices in Europe because it is not supplied once from the quantities offered on the stock exchanges, but through a long-term contract signed with the Russian side. When it comes to electricity, the problem with higher prices could appear only in the event that there is no sufficient production of electricity in the country and the one we get from the Republika Srpska – Vuletic explains.

Energy expert Goran Radosavljevic points out for Danas that everything that is happening in connection with gas in Europe is a consequence of political interference in economic matters.

– In addition, an additional problem is that European countries did not correctly calculate how much gas they really need for consumption, which is why they found themselves in an unenviable situation. As for Serbia, considering the electricity collapse that we experienced in December last year, no one can say with certainty that there will be no new or that there will be no more cold weather that would cause higher consumption. If that happened, Serbia would face higher prices for imported electricity than is currently the case. However, I want to believe that we will be able to preserve the stability of the system until the end of the winter season, after which we should work on increasing the capacity of the underground gas storage “Banatski dvor” and building new domestic capacities for electricity production – says our interlocutor.

Professor of the Faculty of Economics in Belgrade, Ljubodrag Savić, says for Danas that the European Union expects the impossible from Gazprom, and that is that the trader is working against his interests.

– There is no doubt that gas in this case is used by Russia as a tool in the political confrontation with the West. However, the United States and the European Union are doing the same. It is quite clear that a situation in which there is no political tension that affects economic trends suits Russia, because the demand for Russian gas in Europe is high and it can sell and earn it. As for Serbia, in the event that the new gas crisis raises electricity prices and the Electric Power Industry of Serbia is forced to import it, we are the only ones we can be angry about. The reason is that EPS as a company is in a bad condition and that the system is not maintained in an adequate way, which caused domestic production not to give the necessary results, which is why electricity must be imported during the winter when its price is high – our interlocutor concludes, Danas writes.