South Stream and Serbia
Work on Serbian section of the South Stream gas pipeline is planned to start in November or December of this year.
Serbian officials hope it will be significant contributer towards the resuscitation of the failing Serbian economy.
Dusan Bajatovic, general manager of Serbian state-owned gas company Srbijagas, which is the main partner of Gazprom in Serbia, told Natural Gas Europe that the investment in the gas pipeline through Serbian territory would cost about 1.7 billion euros.
The total price of the Gazprom lead South Stream is to be around 15.5 billion euros and the pipeline could start operating in 2015 and reach full capacity in 2018.
Bajatovic added that the pipeline’s section in Serbia would have three units – the first one from the north of the country to the capital Belgrade, the second one from Belgrade to central Serbia and the third one from the central part of the country to eastern Serbia, i.e. the town of Zajecar, which is on the intersection of roads to the Bulgarian and Romanian borders.
What is particularly important for Serbia is that domestic companies will be engaged in the construction.
”The complete Serbian construction sector will be engaged in the project, because it is a huge trench, 470 kilometers long, with two passages under the Danube and a lot of underwater and mountainous terrain,”Bajatovic said, adding that the project will employ two to three thousand workers.
According to him, Srbijagas will design the entire pipeline in Serbian territory, which is a big success for the company.
But that is not the only benefit Serbia can expect from the dealings with the South Stream consortium. Bajatovic is also hoping for additional revenues which would certainly aid the impoverished Serbian budget and the economy that sorely needs foreign investment.
“In the first year of exploitation alone, the Republic of Serbia will earn 200 million euros from South Stream on account of fees,” Bajatovic said.
South Stream provides the Serbian side the opportunity to strengthen its energy security.
Serbia was one of the most endangered European countries during the Russian-Ukrainian gas dispute in late 2008 and early 2009. For that reason, the renovation of the underground gas storage facility Banatski Dvor was recently completed, enabling Serbia to store larger quantities of gas.
Bajatovic is hoping that through all the investments planned with the Russian side, a total of five billion euros may be invested in the Serbian energy sector. Apart from the South Stream, another underground gas storage facility and three to four gas power plants in Belgrade, Novi Sad, Pancevo and Nis are to be built.
The Srbijagas general manager does not fear the construction of the South Stream could be canceled over statements by Ukrainian officials that they are ready to invest some 800 million euros in the Trans-Caspian Pipeline project. “I don’t think that project will be implemented, because the local, rapidly growing economies of China and India are interested in gas from central Asian sources,” he said.
Bajatovic also is not overly concerned by the remarks of certain Serbian politicians that Russia could hold monopoly over the energy sector in Serbia.
“We have been invited to take part only in the South Stream project, we have no invitation for any other projects,” Bajatovic said, pointing out that Serbia is already dependent on oil and gas imports from Russia.
Gazprom has been delivering gas to Serbia since 1978 through the Russian-Serbian broker company Yugorozgaz. In 2010 a total of 1.76 billion cubic meters of gas were delivered to the Serbian market.
Gazprom also holds majority ownership of insurance company Sogaz Serbia, the company for the construction of the Serbian section of the South Stream – South Stream Serbia and the underground gas storage facility in Banatski Dvor. Srbijagas is the minority partner in said companies, with 49 percent stakes.