Natural gas which reaches over 340.000 households connected to the gas pipeline network in Serbia, most of it is from Russia, a country with which Serbia has had long-term contracts for natural gas deliveries for decades.
The last one, agreed in the midst of the Russian invasion of Ukraine, in May 2022 between the President of Serbia, Aleksandar Vučić, and the Russian President Vladimir Putin, expires in March 2025.
Serbia met the Russian invasion of Ukraine completely dependent on gas from Russia, and gas was one of the key reasons why Belgrade did not impose sanctions on Moscow.
Meanwhile, following the example of many European Union (EU) countries that have imposed sanctions on Russia, Serbia has started working on finding other sources of supply.
From November 1 to March 1 next year, as announced by the Serbian Ministry of Mining and Energy, one million cubic meters of gas from Azerbaijan will arrive in Serbia daily.
The contract stipulates that Serbia will receive up to 2026 million cubic meters of gas annually from Azerbaijan until 400. This is enough to meet only 13 percent of Serbia's needs, where more than three billion cubic meters are consumed annually.
A long way to energy independence from Russia
In the EU, the plan is to completely exclude Russian gas from the market by 2027. As Predrag Grujičić, head of the Gas Sector at the Secretariat of the Energy Community (EU regulatory body for the energy sector), told RFE/RL, Serbia is still far from that.
According to the data of the Energy Agency of Serbia (AERS), the national regulatory body, provided to RSE, in 2023, almost 94 percent of imported gas to Serbia came from Russia.
In the first half of 2024, that percentage was slightly lower - 92 percent. According to AERS data, Serbia imported about eight percent of the gas from companies from Hungary, Switzerland and Azerbaijan.
"Russian supplies now account for less than eight percent of the EU's gas mix." Therefore, there are many other sources of gas that are potentially available to Serbia. Gazprom proved to be an unreliable supplier. That's why new options must be explored," Grujicic points out.
According to Dragan Vlaisavljević, an energy expert from Serbia, the capacities for the transit of Azerbaijani gas are small in order for Serbia to significantly reduce its dependence on energy from Russia.
"Those 400 million cubic meters of gas per year, possibly with the option of another 400 million cubic meters per year, is the maximum that can be achieved using the existing gas pipeline infrastructure," explains Vlaisavljević.
Gas from Azerbaijan comes to Serbia through a new gas pipeline with a total capacity of 1,8 billion cubic meters of gas, which connected Serbia via Bulgaria to the Greek liquid gas terminal in Alexandroupoli.
It is the first cross-border gas pipeline in Serbia that is not majority owned by the Russian Gazprom and which was partially financed with grants from the European Union.
"The very dependence (on Russia) can be reduced to some 50 or less than 50 percent in the long term only if Romania is included in the entire supply equation for Serbia in the next decade," Vlaisavljević assessed for RSE.
In August, Serbia and Romania signed an agreement on the construction of a joint gas pipeline with a capacity of 1,6 billion cubic meters of gas, which, according to officials, should be completed by 2027.
Through that pipeline, Azerbaijani gas will be able to be transported to Serbia and gas from other suppliers on the market.
Transit route
The upcoming suspension of the delivery of Russian gas via Ukraine to European countries, announced by the authorities in Kyiv as of January 1, 2025, will make Serbia a more attractive transit route for gas arriving from other countries to the countries of Southeast and Central Europe, says Predrag Grujicic from the Secretariat of Energy community.
"Serbia, as we indicated earlier, should adopt measures to enable new suppliers to efficiently use the gas infrastructure and implement de-monopolization measures towards the dominant player," says Grujicic.
That dominant player in Serbia for more than a quarter of a century is Russia's Gazprom, together with the public company Srbijagas, headed for 18 years by Dušan Bajatović, an official of the Socialist Party of Serbia, which is in coalition with the ruling Serbian Progressive Party, close to the Kremlin.
Until the construction of the gas interconnector between Serbia and Bulgaria, which was put into trial operation in December 2023, Serbia relied only on gas pipelines on its territory, the majority owner of which is the Russian Gazprom.
Balkan Stream
Russian gas is delivered to Serbia through the Balkan Stream, a branch of the joint Russian-Turkish Turkish Stream project. Until its commissioning in January 2021, Serbia received gas from Russia via Ukraine and Hungary.
The section of Turkish Stream in Serbia is majority owned by Russia and only Russian gas flows through it, after the domestic regulatory body, the Energy Agency of Serbia, exempted it from the rules of the European Union, according to which access to other suppliers must be allowed. That move by the authorities in Serbia was met with sharp criticism from the Secretariat of the Energy Community.
In the meantime, as the Energy Agency of Serbia (AERS) stated for RSE, ten percent of the gas pipeline's capacity is open to other suppliers.
"In 2023, in addition to the owner of the gas pipeline, seven companies from the EU and Switzerland used the gas pipeline, and in the first half of 2024, three companies from the EU and Switzerland", according to the written response of AERS.
Putin calls, Vučić changes his mind
Through a long-term contract with Russia, Serbia procures gas, as officials in Belgrade claim, at more favorable prices compared to those on the free market.
According to the agreement reached by Russia and Serbia three months after Moscow launched its invasion of Ukraine, Russia supplies Serbia with 2,2 billion cubic meters of gas per year at a preferential price ranging between $300 and $420 per 1.000 cubic meters of gas.
Eurostat data show that the price of gas in Serbia for households and industry is among the most favorable in Southeast and Central Europe, with no announced increases until the end of the year.
Five months before the expiration of the contract, Serbian President Aleksandar Vučić received an invitation to negotiate a new gas arrangement personally from Russian President Vladimir Putin.
Putin sent Vučić an invitation for gas negotiations along with an invitation to the BRICS summit, which consists of Brazil, Russia, India, China and the Republic of South Africa, which is being held from October 22 to 24 in the Russian city of Kazan.
Regarding whether he will accept Putin's invitation, Vučić said that he will make a decision in mid-October.
"We have important guests from abroad for that time (during BRICS)," said Vučić on September 5, answering a journalist's question about whether he would go to Russia.
A day later, he specified that he "neither refused nor accepted" Putin's invitation.
Energy agreement with the USA
While Vučić weighs Putin's invitation to the BRICS summit, Serbia signs agreements with the United States of America. In September, these two countries signed a sporatum on strategic cooperation in the field of energy, at the same time the first agreement on strategic cooperation between these two countries in general.
The agreement was signed by Serbian Foreign Minister Marko Marko Đurić and US Undersecretary for Energy Jose Fernandez. Đurić assessed the signing of the agreement as "an important and responsible step towards improving the partnership with the USA and ensuring long-term energy security", writes Glas Amerika (VOA).
"This is the first, hopefully, in a series of strategic agreements between Serbia and the USA that will improve the overall character of our relations." Of course, energy has broader implications, but today the goal is to ensure a long-term, stable, safe and clean supply of electricity to the citizens of Serbia, in a way that is economically sustainable enough for Serbia to remain an attractive country for attracting foreign investment," said Đurić in to a short press statement after the signing ceremony at the State Department.
However, the US-Serbia energy agreement will not affect the reduction of Serbia's dependence on Russian gas because it does not apply to projects involving fossil fuels, which includes natural gas. On the other hand, it could open the door to investment in the development of nuclear energy in Serbia, the Ministry of Mining and Energy of Serbia told RSE.
Sustainable energy sources
Promoting American private sector investment in energy projects in Serbia with an emphasis on sustainable energy sources is the focus of the energy agreement between Serbia and the United States.
The goal of the agreement, according to the Ministry, is to increase the use of clean energy and accelerate the process of gradually phasing out electricity generation from coal in order to ensure safe, reliable and diversified sources of supply, including potentially base energy.
"In the event that the Parliament of Serbia adopts amendments to the Law on Energy and thus the moratorium on nuclear energy is lifted, the agreement opens up the possibility of establishing cooperation in the field of nuclear energy development," it added.
The announced changes to the Law on Energy envisage the termination of the Law on the Prohibition of the Construction of Nuclear Power Plants, which has been in force in Serbia since 1989.
Sources: RFE/RL/RL
