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news 13 Jul 15

Turkish Stream Delays Cause Alarm in Serbia

Russian energy giant Gazprom announces fresh hold-up in its plan to build the Turkish Stream pipeline, raising more concerns in Serbia about its gas supply.

Igor Jovanovic
BIRN
Belgrade
Serbian South Stream | Photo by Beta

Serbia faces new worries about its gas supply after Russia's Gazprom on July 8 said it had canceled a contract with Italy's Saipem to build the first section of the Turkish Stream Pipeline under the Black Sea.

South Stream Transport, Gazprom’s subsidiary, said it would soon start negotiations with new potential contractors.

But the announcement has heightened concerns among Serbian experts over Turkish Stream project.

Serbia uses about 2 billion cubic meters of gas a year and only produces about 20 per cent of that amount. The rest is imported from Russia via Ukraine and Hungary, which is currently the only gas supply route for Serbia.

After Russia warned that it would stop delivering natural gas through Ukraine by 2019, Serbian officials have invested their hopes in the Turkish Stream pipeline, which should deliver Russian natural gas to Europe via Turkey, Greece, Macedonia and Serbia.

The pipeline should have an annual capacity of 63 billion cubic meters of gas which, according to experts, should be more than enough to cover the needs of Turkey and Southeast Europe combined.

The head of the Serbian Gas Association, Vojislav Vuletic, warned that Serbia could face serious problems if no new gas pipeline from Russia is built.

“Even if the pipeline from Azerbaijan is constructed there will not be enough gas for Serbia,” Vuletic told Belgrade daily newspaper Blic on July 10, adding that Serbia actually has no real alternative to relying on the Russian gas supply.

On June 18, Gazprom and several European energy companies signed a Memorandum of Intent about construction of two strings of the Nord Stream II gas pipeline, which should take additional Russian gas to Europe through Germany.

However, Vuletic says getting gas from Germany will be too expensive for Serbia.

“Gas from Germany has to flow through the Czech Republic, Slovakia and Hungary before it arrives in Serbia. We would also have to pay taxes to all those states,” Vuletic said.

Serbian officials have been working on gas supply diversification for some time.

In June, Serbia and Bulgaria signed an agreement on a gas interconnection, which should enable Serbia to connect with two pipelines from Azerbaijan – the Trans-Adriatic Gas Pipeline, TAP, and the Trans-Anatolian Gas Pipeline, TANAP.

Also, at the end of the June, Romania invited Serbia to join the AGRI project, which aims to bring gas from Azerbaijan and so help countries in Europe diversify their gas supply.

But, Mahmud Busatlija, from the Economic Institute in Belgrade, told BIRN that the amount of natural gas coming from an interconnection with Romania would not be enough to power  dynamic economic development in Serbia.

“The gas from the AGRI project would be more expensive for Serbia since it is in a liquefied state. Serbian officials have to realize that we need much more gas if we want significant economic development,” he said.

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