Serbia 'urged' to reduce energy dependence on Russia

Serbia ‘urged’ to reduce energy dependence on Russia

Serbia plans to regain majority control of NIS, its main oil company, from Russia’s Gazpromneft as it rushes to protect itself from the impact of sanctions on Moscow, the Balkan country’s president has said.

Belgrade is also preparing half a dozen other projects to diversify the country’s energy sources, including closer cooperation with Hungary, in a bid to reduce its dependence on Russia, Aleksandar said. Vucic.

“It’s crazy that we haven’t thought about connecting with each other and building this infrastructure network before,” Vučić said. “We weren’t used to wars in Europe, but now it’s different. Almost everything has changed. That’s why we are in a hurry.

Moscow’s acquisition of Serbian gas storage and oil refinery operators and Belgrade’s more recent failure to secure alternative long-term supplies left the landlocked country exposed as the EU targeted Russian energy after his invasion of Ukraine. In recent years, Serbia has imported all of its gas and up to half of its oil from Russia.

From December, EU sanctions mean that Croatia will no longer be able to transport Russian oil to Serbia. And if Brussels reverses a waiver of a Russian ownership ban, Belgrade’s main oil company, NIS, will no longer be allowed to do business with EU entities; this would effectively end its operations as it receives all of its oil via the Croatian Adria pipeline.

Aleksandar Vucic
Aleksandar Vučić: “If there were other sanctions against Russian companies, it would be a huge problem for us” © Johanna Geron/Reuters

According to three sources with knowledge of the situation, several groups, including the Serbian government and Hungarian energy company MOL, have considered buying the majority stake from majority owner Gazpromneft, although talks on a sale have stalled. MOL declined to comment.

For now, NIS can operate normally because its refineries have been retooled to process oil from Iraq and other countries and because of Belgrade’s exemption from EU sanctions against Russian companies.

But Vučić said Serbia, a candidate for EU membership, should consider “all possibilities”, including taking over the NIS and alternative supply.

“If there were more sanctions against Russian companies, that would be a huge problem for us,” Vučić told the Financial Times. “We will have to act anyway. . . we need to secure enough oil and gas for our people.

He added: “If nobody wants to work with NIS. . . then we will act, but this is not the case so far.

Vučić is being cautious as he wants to avoid confrontation as his country depends on gas imports from Russia, a traditional ally of Serbia, analysts said. Vuk Vuksanović, a researcher at the Center for Security Policy in Belgrade, said only drastic conditions such as stopping Russian gas flows or expanding European sanctions would trigger a hostile NIS takeover.

Having formed a new government last month after winning elections in April, Vučić plans to spend around 2 billion euros a year to upgrade energy infrastructure, including new oil and gas links to Bulgaria, Romania, North Macedonia and possibly Montenegro.

Vučić held talks with Hungarian Prime Minister Viktor Orbán last month on strengthening energy ties, including an oil pipeline to connect Serbia to the Hungarian grid and an electricity partnership.

Serbia would like to take a 10-15% stake in Hungary’s Paks nuclear power plant, where two new reactor blocks are under construction. Russian state-owned Rosatom supplies Paks with fuel and builds its new reactors, but is not subject to Western sanctions.

The plan could give Serbia access to up to 600 MW of power generation capacity from Paks, although Vučić said there was no final decision on the matter yet. In return, Hungary would get a similar stake in Serbia’s national electricity company, whose hydroelectric dams contribute about a quarter of Serbia’s electricity.

“We have full confidence in Hungary as a country and [in] this kind of energy alliance,” Vučić said.

Serbia’s inefficient economy makes it vulnerable to disruptions in energy flows, Aleksandar Macura, energy expert at Belgrade’s RES Foundation, told a conference last week.

“Serbia needs three times more energy to produce the same GDP as the EU average,” Macura said.

But the president said a gas pipeline to Bulgaria would be operational before next winter’s heating season, adding import capacity of 1.8 billion cubic meters of gas per year, about half the annual consumption of the country. Belgrade is also in talks with Azerbaijan on gas shipments starting next year.

Vučić said that “with another [pipeline to] North Macedonia we can connect with the Trans-Adriatic and Trans-Anatolian pipelines [which transport gas from Azerbaijan], as well as LNG terminals in Greece. It’s all part of our diversification.

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