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Gas situation: Serbia intends to deprive Russia of the status of the main fuel supplier
Serbian Energy Minister Dubravka Jedovic-Handanovic plans to announce the liberalization of the country's gas market in the coming days, depriving Gazprom of the status of the main fuel supplier to the republic, Izvestia found out. This decision will jeopardize negotiations on a new long-term contract, which are being conducted by Moscow and Belgrade. Diversification of gas supplies is one of the requirements for joining the EU. As an alternative to Russian energy sources, Belgrade may consider gas from Azerbaijan and LNG from the United States. However, ordinary Serbian consumers will suffer, and the economic situation will worsen, experts say. The story of how the West is trying to oust Russia from the Balkan market with the help of a split in the Serbian elite is in the Izvestia article.
Belgrade is preparing to look for a replacement for Russian gas
The Minister of Mining and Energy of Serbia Dubravka Djedovic-Handanovic plans to announce the liberalization of the republic's gas market in the coming days, thereby depriving Gazprom of the status of the main supplier. A source in the government of the republic told Izvestia about this.
— Energy Minister Dubravka Djedovic-Handanovic, who holds French citizenship and studied at the University of California, is preparing to make a decision on liberalizing Serbia's gas market in the coming days. Therefore, in the future, any company will be able to sell gas to Serbia, Gazprom will lose its status as an exclusive supplier," the source told Izvestia.
In the event of a decision to liberalize the gas market, the future contract between Serbia and the Russian Federation will be in jeopardy, according to a government source.
Izvestia has requested a comment from the press service of the Ministry of Mining and Energy of Serbia.
Earlier, Dusan Bayatovich, director of Serbiyagaz, said that a contract for gas supplies from Russia for at least three years is expected to be signed in September. In May, Moscow and Belgrade extended the validity of the current agreement until September 30. Belgrade is currently receiving 6 million cubic meters. m per day at a price of €290 per 1 thousand cubic meters.
The Russian Embassy in Serbia confirmed to Izvestia that negotiations are currently underway to conclude a new long-term agreement. Moscow is also involved in improving the country's gas transportation infrastructure, Russian diplomats noted. Izvestia has sent a corresponding request to Gazprom.
Belgrade is under considerable pressure from the European Union, as the liberalization of the energy market is one of the requirements for joining the union. The report of the European Commission on the negotiations on Serbia's accession to the EU from 2024 contains a requirement to "reduce dependence on Gazprom and remove any obstacles for new market participants."
The idea is for Serbia to bring its gas market to a pan-European model by dividing the gas transportation system into separate companies. In addition, the third energy package, one of the EU laws, requires that one supplier load no more than 50% of the pipeline's capacity, even if the other half is idle. Igor Yushkov, an expert at the Financial University and the National Energy Security Fund, told Izvestia about this.
— It is not profitable for Russia for Serbia to implement European legislation. For us, this is a risk from the point of view that gas passes through Serbia to Hungary and Slovakia. The European Union will squeeze Russia out of the gas market by preventing it from pumping gas to consumers, the expert said.
The EU is also exerting pressure on Serbia in order to detach Belgrade from Moscow, depriving it of ties with Russia, INF program manager Milan Lazovich told Izvestia. This applies to direct flights, cultural ties and economic relations. Serbia's dependence on Russian gas is seen in Brussels as an instrument of Moscow's influence, while the EU intends to get rid of Russia's presence in the Balkan region.
Split in the Serbian government
However, there is no consensus within the Serbian Government on market liberalization. Serbian Prime Minister Djuro Matsut and director of the Serbiyagaz company Dusan Bajatovic oppose this step, but this decision is within the competence of the Minister of Energy, a source in the government of the republic told Izvestia.
There is a pro-Russian wing and a pro-European wing in the Serbian leadership, they compete with each other, Lazovich said. Interior Minister Ivica Dacic and Minister without portfolio Nenad Popovich are committed to developing relations with the Russian Federation. Until recently, Alexander Vulin, who sympathizes with Russia, held the post of deputy prime minister.
— There are no ardent pro-European politicians in Serbia, but there are conditionally "more pro-European" ones. I would really call Foreign Minister Marko Juric and Energy Minister Djedovic-Handanovic drifting towards the West," the expert noted.
Germany and the United Kingdom are putting pressure on Serbia to purge its government of politicians who advocate developing relations with Moscow. Internal instability is also being exploited: London and Berlin threaten to intensify anti-government protests in the country, which have not subsided since last year, Izvestia wrote earlier.
There is competition between pro-Russian and pro-Western politicians, but there is no sharp struggle, as President Aleksandar Vucic controls all processes. His position on liberalizing the gas market remains unclear, but he supports a long-term contract with Gazprom, a government source said.
— Vucic will not allow sharp lurches from Russia towards the West, he will continue the policy of balancing. The Serbian president will strictly adhere to contacts with the Russian Federation, especially in matters of gas and flights," said Milan Lazovic.
The Serbian leader has repeatedly demonstrated his willingness to maintain cordial relations with Russia. In particular, he was one of the European leaders who participated in the Victory Day Parade on May 9 in Moscow, despite the refusal of some countries to let his plane pass. After the statements of the Russian Foreign Ministry that Serbian weapons were entering Ukraine, Vucic announced the suspension of exports and the creation of a special working group.
Will the republic be able to replace Russian gas
The desire of a part of the Serbian political elite to preserve the contract with Gazprom is absolutely pragmatic, since Belgrade will not be able to easily replace Russian natural gas. Serbia receives the vast majority of its gas consumption through the Turkish Stream from Russia, while the share of other sources is extremely small.
It is no secret that Russia sells gas to Serbia at a certain discount, that is, cheaper than on the European stock exchange. Therefore, Serbia cannot find a better deal than this offer. The only available options are to increase pipeline gas supplies from Azerbaijan and purchase LNG with delivery via Turkey and Bulgaria, Igor Yushkov said.
"Serbia consumes about 3 billion cubic meters of gas, Azerbaijan is unlikely to be able to supply such volumes," said a leading expert from the Financial University and the National Energy Security Fund.
At the same time, Serbian Minister of Mining and Energy Dubravka Jedovic-Handanovic said that negotiations on the conclusion of new gas contracts with Azerbaijan will begin in the near future. According to the current agreement with Baku, Belgrade receives up to 400 million cubic meters of gas per year until 2026. The head of the Serbian energy department plans to increase this volume to 1 billion cubic meters. Supplies go through a pipeline from Bulgaria, and a gas pipeline is also being built that will connect Serbia with North Macedonia. Its planned capacity is about 1.2 billion cubic meters of gas per year.
However, it will not be possible to replace gas from Russia with supplies from Azerbaijan alone due to a lack of volumes. There remains the option of purchasing LNG on the global market. The United States is particularly interested in this, since the European Union has agreed to purchase energy resources from the United States for $750 billion over the next three years (primarily LNG).
For ordinary consumers, this will result in an increase in prices and the ruin of enterprises that will lose their competitiveness. The Serbian economy, thanks to preferential supplies of Russian gas, demonstrated steady growth: in 2023 it amounted to 3.8%, in 2024 — 3.9%.
Serbia is objectively in a difficult situation — it is surrounded on almost all sides by NATO countries, its main trading partners are mainly EU countries, and a large number of Serbs work in European countries. Trade turnover with Russia is falling against the background of Western sanctions: back in 2022, it amounted to $4.2 billion, in 2023 - $3 billion, and in 2024 — $2.4 billion. Serbia has also terminated several arms supply contracts with Russia.
Under these conditions, Belgrade overcomes powerful pressure by refusing to impose sanctions against Russia. Energy supplies remain the main field for economic cooperation, and the West's attempt to deprive Russia of the status of the main fuel source will affect not only ordinary Serbs, but also relations between the two countries.
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