Serbia risks spending too long playing gas games

Serbia risks spending too long playing gas games

The regional competition between Central and Eastern European states to receive and transport Russian gas is entering a new phase. The outcome of Slovak Prime Minister Robert Fico’s visit to Slovakia has shown that his country, along with Bulgaria, Romania and Hungary, is determined to implement a major regional project that will link up with the infrastructure of the Turkish-Russian Turkish Stream project. This will allow the route passing through Bulgaria (South Stream 2.0) to be revived in new conditions, but will also sideline the countries of former Yugoslavia headed by Serbia that will probably only be able to rely on local branches from the main gas pipeline. Given the permanent instability in Macedonia, the contradictory position of the Skopje authorities and Belgrade’s desire to have a foot in both camps, this outcome seems completely logical.

«If we do not become a gas transit country then our budget will suffer huge losses», said Slovak Prime Minister Robert Fico, explaining Bratislava’s initiative following talks with his Russian counterpart Dmitry Medvedev 1. According to Fico, the Slovak government understands perfectly well that Russia’s refusal to transport gas through Ukraine after 2019 will result in reduced revenue for Slovakia, through which the Russian gas that passes through Ukraine flows into Europe. This is why the Slovak authorities are making it clear that they intend to work actively to «maintain the country’s key role in the transit of Russian gas to the EU».

The Eastring project, designed to unite the gas pipeline systems of Slovakia, Bulgaria, Hungary and Romania and link up with the infrastructure of Turkish Stream, could play a decisive role in the implementation of Slovakia’s energy policy and the energy policy of its neighbours in the region. «We will only be able to implement such projects if agreements are reached between the four countries and with the participation of Russia. Responsibility compels us to look for alternative ways to resolve the issue», stressed Fico, adding that «the urgency of the project will increase as Turkish Stream is realised». For his part, Russian Prime Minister Dmitry Medvedev has promised that Moscow will look at the Slovak initiative and the implementation of those opportunities that will emerge when Russian gas «reaches the Greek border» along the new pipeline. The talks have «reaffirmed our desire to actively develop bilateral cooperation regardless of any opportunistic considerations», emphasised the chairman of the Russian government.

The preliminary route of Turkish Stream agreed by Russia and Turkey involves the construction of a gas pipeline with a capacity of 63 billion cubic metres per year. It is expected to go from the Russkaya compressor station near Anapa along the bottom of the Black Sea to the village of Kiyikoy in the European part of Turkey and on through the town of Lüleburgaz to the district of Ipsala on the Turkish-Greek border. The gas transport hub being planned for this area is expected to receive and pass on to Europe around 50 billion cubic metres of gas per year.

Russia has already made it clear to its partners that it is willing to look at options regarding its involvement in the construction of the necessary gas pipeline infrastructure, in Greece at any rate. These issues were recently discussed by Gazprom CEO Alexei Miller and the Greek Minister of Productive Reconstruction, Environment and Energy, Panagiotis Lafazanis. Following the talks, both sides noted that Gazprom was ready to consider options for building the infrastructure on «mutually-beneficial terms».

What could this mean in practical terms for Serbia, Macedonia and other republics of the former Yugoslavia that had expected to become a key transit route for the transportation of Russian gas to Europe during the development of the South Stream project, with all the financial benefits and political privileges that that implied? First of all, that the governments of Central Europe, at this stage at least, seem to be more capable of negotiation, more enterprising and more responsible partners than the Balkan governments. This also applies to Serbia, whose authorities seriously undermined its image by launching an investigation, with the involvement of the West, into the 2008 intergovernmental agreement between Russia and Serbia on cooperation in the energy sector that was intended to be the cornerstone of processes to link Serbia with Russia’s gas pipeline projects. And the numerous statements by Serbia’s leaders regarding their commitment to European Commission guidelines can hardly be regarded as constructive and meeting the country’s fundamental national interests in a sector as important as energy. In this regard, the Austrian newspaper WirtschaftsBlatt points out that «Serbia is making cautious concessions to the West», observing ironically that «it is now liked by the United States». We can add that Serbia is also going to be especially liked by America’s energy companies, which are ready to supply the Serbs with shale gas at an inflated monopoly price.

It stands to reason that Russia is not refusing to cooperate with Serbia on energy issues. This was evidenced by the working meeting that took place on 28 May in Belgrade between Alexei Miller and Serbian Prime Minister Aleksandar Vučić, at which the prospects of supplying Russian pipeline gas to Serbia, as well as the joint implementation of gas projects, were discussed. In this regard, it should be mentioned that a long-term contract for the supply of up to 1.5 billion cubic metres of Russian gas to Serbia per year for ten years was signed in 2013. And despite the unfavourable international political and financial conditions, Russia clearly fulfilled its obligations within the parameters specified in 2014. The Banatski Dvor underground gas storage facility, one of the largest gas storage facilities in Southeast Europe that was built as part of the aforementioned 2008 intergovernmental agreement, is also operating successfully. It has an active gas storage capacity of 450 million cubic metres and a maximum production capacity of 5 million cubic metres of gas 5.

Today’s rapidly changing conditions of energy competition, however, require all those involved to be more committed and, most importantly, more determined to stand up for their own interests. And in this regard Serbia has considerable reserves. As the experience of Slovakia and its neighbours in the region shows, even membership in the European Union and NATO does not prevent them from developing mutually-beneficial cooperation projects with Russia. Provided that there is an objective and independent understanding of national and state interests, obviously.