Serbia Considering Connection to Turkish Stream, Gas Supply From Azerbaijan

Serbian officials at the beginning of April, in a bid to provide the state with stable gas supply sources, carried out intensive diplomatic activities aimed at including Serbia in the Turkish Stream project and finding ways to secure the delivery of gas from Azerbaijan.

Serbia currently receives gas from Russia, with very low domestic production, and transit is done via Ukraine and Hungary. After Russia announced plans to stop deliveries via Ukraine in 2019, the Serbian authorities are attempting to find other ways and sources of gas supply.

First, Minister of Foreign Affairs Ivica Dacic in Budapest on April 7 took part in a meeting with his counterparts from Hungary, Macedonia, Greece and Turkey, where the topic of discussion were projects meant to ensure energy security in the region. The ministers signed a declaration on strengthening energy cooperation and agreed that cooperation in establishing energy security contributed to good neighborly relations and citizens’ well-being. They also supported “the creation of a commercially sustainable route and sources of diversification for natural gas deliveries from Turkey via the territories of their countries to central and southeast Europe, and to other countries.”

After the meeting, Minister Dacic said that all states were trying to find an alternative to the South Stream project, which Russia abandoned, and that estimates say the construction of a new pipeline through Serbia within the Turkish Stream project would cost between 1.5 and two billion euros. The pipeline is to become operational in 2019, while gas from Russia would be delivered to Turkey and then to Greece, from where Macedonia, Serbia, Hungary and perhaps some other central European countries as well would be supplied. The gas pipeline is to have the annual capacity of 63 billion cubic meters of gas and is set to run along the Black Sea bed from Russia to Turkey, mainly following the route initially planned for South Stream.

However, Dacic underscored that the situation was more unfavorable for Serbia compared with South Stream, because the money for the construction of that pipeline would have been paid back to the Russians from the charging of the transit fee, whereas it would have to find the money for the pipeline that would connect to Turkish Stream from its own modest budget. “We, the citizens of southern Europe, Western Balkans, through Greece to Turkey, have the same rights and are equal with the citizens who satisfy their needs from North Stream and some other gas pipeline that had the support of the European Commission and were even exempted from the Third and various energy packages, which South Stream was not,” said Dacic.

Analysts in Serbia have said that Turkish Stream is a good substitute for the abandoned South Stream project, but that it is highly questionable whether Serbia will find the money to get involved in the Russian-Turkish project. “The very idea of Turkish Stream is to make it an alternative to South Stream. It’s good that Serbia is on its route, because that is our alternative for gas supply,” said Balkan magazine editor Jelica Putnikovic. However, Vojislav Vuletic, head of the Serbian Gas Association’s Assembly, said that the problem lay in the fact that the money for Turkish Stream would have to be provided by the states through which it will pass. “Turkish Stream is to be built by the countries it would run through, and they are Greece with no money, Macedonia which is no better than Greece, and us, who also have no money,” said Vuletic.

 Seven days after the meeting in Budapest, Russian Minister of Energy Alexander Novak sent an encouraging message to Serbia by saying Turkish Stream could run through Serbia and from there extend to Hungary and Austria. “I know that many countries are interested in the project. For example, the delivery of gas to the Austrian hub Baumgarten is possible via Greece, Macedonia, Serbia and Hungary,” said Novak, as reported by Russian news agency Sputnik. The Russian minister, who is slated to visit Serbia at the end of April or beginning of May, added that Russia was leading intensive negotiations with the countries that could become transit hubs.

However, schooled by the experience with South Stream and the fact that the Russians have announced they will stop sending gas via Ukraine in 2019, Serbia is trying to find alternative supply sources. One of them is Azerbaijan, which Serbian Prime Minister Aleksandar Vucic visited in mid-April.

At the meetings in Baku, agreement was reached for the Azerbaijani state gas company SOCAR to form a commission that will look into the possibilities of supplying gas to Serbia from Azerbaijan. Vucic said it was very important that Serbia was attempting to connect to the Southern Gas Corridor, which is to bring Azerbaijani gas to southern Europe, so that Serbia may diversify its supply sources. SOCAR owns stakes in the Trans-Anatolian Gas Pipeline (TANAP) and Trans-Adriatic Pipeline (TAP).

Serbian Minister of Mining and Energy Aleksandar Antic said the cancelation of South Stream imposed the need for countries in the region to analyze all the projects that could bring gas to the region. Antic added that at the meeting in Budapest, besides Turkish Stream, participants had also examined the potential of a TANAP-TAP project, a liquefied natural gas terminal in Greece and Croatia. “We agreed to continue our activities and to take them from the political to the technical and expert level, and to provide answers to whether those projects are feasible,” said Antic.