Into the next gas: How the West is trying to replace Russia in the Balkans

The United States is trying to get rid of a gas competitor in Bosnia and Herzegovina, the Russian Embassy in Sarajevo told Izvestia. At the same time, the diplomats believe that the processes related to ensuring energy security in BiH should not be politicized and become a subject for speculation on the part of Washington. Meanwhile, Serbian President Aleksandar Vucic recently announced sanctions that the United States is preparing against a major oil and gas company that provides, among other things, Russian gas supplies to the country - the problem is that most of it is owned by companies from Russia.

Why Bosnia and Herzegovina is building a pipeline to Croatia

Replacing Russian natural gas under the guise of diversifying supplies is part of a broader effort by Brussels and Washington to reduce Russia's influence in the Balkans. A Brussels Declaration was signed at the conclusion of the EU-Western Balkans summit (the region includes six countries and territories: Albania, Bosnia and Herzegovina (BiH), the partially recognized Republic of Kosovo, North Macedonia, Serbia and Montenegro).

The EU called on the countries of the region to more actively join the association's foreign policy, to comply with anti-Russian sanctions, and to reduce their dependence on energy resources from the Russian Federation more quickly. In return, they were promised accession to the EU. North Macedonia received candidate status the earliest - in 2005. Montenegro - in 2010, Serbia - in 2012, and Albania two years later. Bosnia and Herzegovina became a candidate for EU accession in 2022.

Gas from Russia is supplied to the Balkan countries mainly through the Turkish Stream pipeline. Bosnia and Herzegovina (BiH) is among its recipients. Now the U.S. side, in fact, is promoting the construction of a gas pipeline to neighboring Croatia. And this project is obviously aimed at reducing the supply of Russian blue fuel to BiH. Although Russia has always been a conscientious partner, fulfilling its contractual obligations in full, including on natural gas supplies, the Russian Embassy in Sarajevo told Izvestia.

- We are building our cooperation in the fuel and energy sector on a mutually beneficial basis, which fully meets mutual interests. As for the plans for the construction of gas transportation infrastructure in BiH, this issue is an internal matter of Bosnia and Herzegovina. We proceed from the fact that the final decision should be made by consensus of the state-forming peoples - Bosniaks, Serbs and Croats," the diplomats said.

At the same time, "the processes related to ensuring the energy security of BiH should not be politicized and become a subject for speculation on the part of primarily Washington, which seeks to achieve its own benefit to the detriment of ordinary citizens of Bosnia and Herzegovina under the guise of imaginary diversification of sources of fuel supply to the country," the diplomatic mission added.

On December 13, the House of Representatives of the Parliament of the Federation of Bosnia and Herzegovina (part of Bosnia and Herzegovina) voted for the construction of a gas pipeline to neighboring Croatia. The project has a budget of $169 million and should be operational by 2030. The pipeline will connect the two countries' energy systems, allowing Sarajevo to receive gas through an LNG terminal on the Croatian island of Krk, which can receive 2.9 billion cubic meters of gas annually. Hungary's oil supply is also being considered through this terminal.

The capacity of the pipeline would be 1.5 billion cubic meters per year, which is six times the consumption of Bosnia and Herzegovina in 2022. Obviously, this pipeline is not only intended to meet the needs of Sarajevo, but in the future it can be used to supply other countries.

For example, the possibility of connecting it to the Ionian-Adriatic pipeline, which will connect Albania, Montenegro, Bosnia and Herzegovina and Croatia, is being considered. Already at the mentioned EU-Western Balkans summit, Brussels invited the countries of the region to join the pan-European mechanism for the purchase of blue fuel.

The pipeline project to Croatia has existed for many years, but its realization was blocked by the Croatian party HDZ BiH. This political force demanded that a Croatian company, not a Bosnian one, should be in charge of the construction. It was only after Washington's intervention that the construction permit was obtained. In January 2024, U.S. Secretary of State Anthony Blinken said that the position of the Croatian party could "cause delays in this critical project." The White House's actions are driven by its economic interests: the launch of the pipeline will allow BiH, and in the long term other Balkan states, to buy American LNG. It should be reminded that in the first half of 2024, 48% of LNG imports to Europe fell on the United States. Therefore, Washington is interested in further displacement of Russian competitors.

It should be noted that the investors of the pipeline connecting BiH and Croatia are the European Bank for Reconstruction and Development, as well as the Western Balkan Investment Program.

- The construction of the gas pipeline is being carried out within the framework of the European plan for the development of gas transportation capacities," Alexander Frolov, Deputy Director General of the Institute of National Energy and Editor-in-Chief of InfoTEK, told Izvestia. - The leadership of Bosnia and Herzegovina and Croatia will try to earn political points by saying that they have built a gas pipeline.

Gas supplies to Serbia

Bosnia and Herzegovina now receives gas through a pipeline from Serbia, mostly used for heating Sarajevo. As of 2021, Russia has supplied BiH with 0.21 billion cubic meters of gas. Increasing its supplies to the republic and signing a long-term contract is hindered by the limited capacity of the string from Serbia.

To increase pumping, Russia and Republika Srpska (an entity within BiH) are considering the construction of a gas pipeline that would allow the latter to receive up to 1-1.5 bcm annually. This initiative is being blocked by Sarajevo, most likely because of pressure from the US embassy, Radovan Viskovic, Prime Minister of Republika Srpska, said in an interview with Izvestia. To ensure its energy security, Republika Srpska should get as close to the Serbian energy system as possible, said MGIMO professor Elena Ponomareva.

- Republika Srpska is unlikely to vote in favor of this decision (construction of the pipeline to Croatia - Ed.). There are also questions about future accession to the European Union. "Until Republika Srpska is absorbed, they won't be able to do anything," she told Izvestia.

Russia supplied 155 billion cubic meters to European consumers in 2021 and 25 billion cubic meters in 2023. About 15 billion cubic meters of natural blue fuel is supplied through the "Turkish Stream". It is worth noting that the countries of the Balkan region are actively engaged in the resale of Russian pipeline gas.

- In my opinion, unless there are some tough political decisions, say, a complete ban on Russian gas in the European Union, in the foreseeable future I expect its supplies from Russia via the Black Sea and Turkish Stream to Bulgaria and neighboring countries to be extended," Stanislav Mitrakhovich, an expert of the National Energy Security Fund and Financial University, told Izvestia.

Competition in the Balkans is growing, and in order to reduce the presence of Russian gas, Western countries are using political tools. However, in the long term, pipeline Russian gas will retain its competitive advantages over US LNG for the states of the region.

The U.S., however, is also using sanctions policy to push Russia out of the Balkan energy market. The Serbian president earlier admitted that the US may soon impose restrictions against the energy company Naftne industrije Srbije ("Naftne industrije Srbije"). NIS is 50% owned by Gazprom Neft, with Gazprom holding another 6%. Serbia has about 30% of shares.

- I have to say that this is one of the hardest news in the last few years, it has been confirmed to us, we have not received the official paper yet, but we have received confirmation of this news. <...> The United States will impose in a few days full, complete sanctions against Naftne industrije Srbije because of Russian ownership," Aleksandar Vucic said.

At the same time, London may also join the restrictions. It is expected that the measures will be introduced from January 1, 2025. Against this background, Vucic announced his intention to discuss with Vladimir Putin not only the problem of sanctions, but also a new gas contract. Whether it will be a face-to-face meeting or a telephone conversation remains to be seen.

In early December, Serbian Deputy Prime Minister Aleksandar Vulin said that the republic was interested in increasing gas supplies from Russia and possibly concluding a new agreement. According to Vucic, Belgrade is discussing a three-year agreement with Moscow.

Which Balkan countries may join the EU

At the same time, Brussels and Washington are generally trying to use the energy issue to force individual countries to join anti-Russian measures. Bosnia and Herzegovina is prevented from doing so by Banja Luka (the capital of Republika Srpska). Belgrade, on the other hand, has always been against restrictions on Moscow.

- Serbia still declares as a strategic goal the accession to the EU, at the same time not wishing to join the sanctions against Russia as a matter of principle, and therefore is under constant pressure from Brussels. At the same time, as before, we can observe significant financial injections and investments of EU member states in Serbia against the background of Belgrade's attempts to maintain a multi-vector foreign policy course," RIAC Program Coordinator Milan Lazovic told Izvestia.

At the same time, the country should not count on joining the EU - even in case of potential accession to sanctions. Western Balkan states, including, for example, Montenegro and Northern Macedonia, which are NATO members, do not meet the criteria of the union because of their economic problems, high level of corruption and crime. Moreover, within these countries, not everyone agrees with the prospect of EU membership. For example, one of the constituent parts of Bosnia and Herzegovina, Republika Srpska, does not want to follow the path of European integration.

- And the EU itself, despite the ongoing negotiation process on the accession of new members, as it seems to me, the real enlargement is not a top priority at the moment," added Milan Lazovic.

In the case of Serbia, we cannot forget about the Kosovo problem, which will continue to hinder Belgrade's rapprochement with the EU. However, it will be able to withstand external pressure, said Lena Milojevic, chairman of the board of the Nikola Tesla Serbian Union, in a commentary for Izvestia.