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Serbia seeks to boost energy security


In a effort to solidify the security of its energy supply, Serbia opened an underground gas storage facility in Banatski Dvor last week, which can receive about 3m cubic meters of gas per day. The facility will hold natural gas deliveries from Russia.

The facility was opened by the Serbian company Srbijagas and the Russian company Gazprom, which owns the Serbian Oil Industry. Co-operation between the two companies and the opening of the underground facility are based on an interstate deal between Serbia and Russia on the oil and gas industries, made in 2008.

Gazprom controls 51% of the joint company, while Srbijagas owns 49%, in concordance with the amount of investment.

Serbia sorely needed new gas storage facilities, since it was among the countries hardest hit by the Russia-Ukraine gas dispute in late 2008 and early 2009.

Serbian President Boris Tadic said at the opening ceremony on November 21st that Serbia, given its strategic partnership with Russia, has the potential to become an important energy hub in Southeast Europe.

“We will achieve that by investing in gas pipelines, the production of oil derivatives and gas-fueled power plants,” Tadic said.

Analyst Valentina Nesic, whose field of work involves Serbia’s energy issues, told SETimes that Serbia already is the energy hub of the region due to its geographic position.

“The Serbian power grid is connected to eight states and is unavoidable in the transmission and trade of electricity. The construction of the South Stream gas pipeline and the underground gas storage facilities in Banatski Dvor and Itebej, in collaboration with Russian Gazprom, will only strengthen that position, but also enable Russia to solidify its role as Europe’s gas supplier,” she said.

At the opening of the Banatski Dvor facility, Gazprom Managing Board Chairman Alexey Miller announced that the construction of the South Stream gas pipeline would start in 2013 and wrap up by the end of 2015.

Economists believe this is good news for Serbia, because the project is sure to bring new investment.

“South Stream is born out of Russia’s desire to sidestep Ukraine and secure regular gas supplies to this part of Europe. Serbia can use that, because it will certainly get new investments, primarily another gas storage facility like this one in Banatski Dvor. Revenue from the storing of gas alone will be significant for the Serbian economy,” economic analyst Mahmut Busatlija told SETimes.

Serbia’s officials harbour the same hopes. Srbijagas General Manager Dusan Bajatovic said about 5 billion euros will be invested in the energy sector if all the projects planned within the Serbian-Russian co-operation in energy are successfully realised.

He specified that the projects in question are the South Stream pipeline, one more underground gas storage facility and the construction of three to four gas-fueled power plants in Belgrade, Novi Sad, Pancevo and Nis.

Busatlija told SETimes that such investments are possible, but points out that Belgrade will have to settle for minority ownership, because a lot of money will be needed and it will predominantly be invested by Russia.

“Many say the Russian monopoly is a flaw, but Serbia is now completely dependent on Russian oil and gas; however, the arrival of new investments that will certainly improve Serbia’s position in the region is still an advantage,” he said.