B1 and B2 of the TPP “Kostolac” (350 MW each) and the c<strong>on</strong>structi<strong>on</strong> of the new unit “Kostolac B”.The works should start this year, and are expected to be finalized by the end of 2015.20FOCUS ON ENERGYti<strong>on</strong>alDevelopment signed a memorandum of cooperati<strong>on</strong> in the area of renewable energy. Thisincludes the commitment of some EUR 223,000 for the development of projects aimed at thepromoti<strong>on</strong> and the use of solar energy.the Novi Sad city government) announced a public tender for the c<strong>on</strong>structi<strong>on</strong> of a new gas-fuelledcombined heat and power plant in Novi Sad with a power output of between 400 and 500 MW andwith a heating power capacity of at least 300 MW. The new plant should provide heating for morethan 80,000 households and business users in Novi Sad.Natural Gas SubsectorSerbia has modest domestic figures for the producti<strong>on</strong> of natural gas (its planned producti<strong>on</strong> for 2009was around 224.2 milli<strong>on</strong> m3) from its natural gas reserves located in Vojvodina, the northern provinceof Serbia. Approximately 91% of the natural gas c<strong>on</strong>sumed in Serbia is imported.The system for the transportati<strong>on</strong> of natural gas includes a 2,140 km l<strong>on</strong>g high pressure pipeline (16-50bar) stretching from the Hungarian border to Niš. The gas pipeline allows for the import of Russian gasfrom Hungary and the transit of gas to Bosnia and Herzegovina. The existing pipeline system is operatedby the public utility company “Srbijagas”, with the excepti<strong>on</strong> of Secti<strong>on</strong> MG-9 Pojate-Niš, which is operatedby the private company “Yugorosgaz”.The natural gas distributi<strong>on</strong> network c<strong>on</strong>sists of 650 km l<strong>on</strong>g middle-pressure (4-16 bar) and 3,000 kmof l<strong>on</strong>g low-pressure (up to 4 bar) pipeline, and is located mostly in Vojvodina and to a lesser extent,central and southern Serbia. The majority of the distributi<strong>on</strong> network is operated by the public utilitycompany “Srbijagas”, and to a lesser extent by “Yugorosgaz” which is c<strong>on</strong>trolled by “Gazprom” and localdistributors.DEVELOPMENT PRIORITIESNatural gas is expected to have an increasingly important role to play in the provisi<strong>on</strong> of energy overtime because of its price and its relatively favourable impact <strong>on</strong> the envir<strong>on</strong>ment. The main goals in thedevelopment of the gas sector include the following:tureis over 30 years old).
annual figure of 6,100 milli<strong>on</strong> m3) to an annual figure of 6,800 milli<strong>on</strong> m3.Russian gas. In December 2006 the company ”Gazprom-Export” and the Serbian Ministry of Miningand <strong>Energy</strong> signed a memorandum of understanding <strong>on</strong> the c<strong>on</strong>structi<strong>on</strong> of a 400 km l<strong>on</strong>g gaspipeline with a capacity of 20 billi<strong>on</strong> m3s of natural gas through Serbia.with an annual capacity of 850 milli<strong>on</strong> m3 (covering 25% of the annual c<strong>on</strong>sumpti<strong>on</strong> in Serbia).CURRENT PROJECTSIn 2009, the governments of Serbia and Slovakia signed an agreement <strong>on</strong> the cooperati<strong>on</strong> between companiesof the two countries in the development of the gas infrastructure in Serbia. This also provided forthe c<strong>on</strong>structi<strong>on</strong> of a gas storage depot with a capacity of 500 milli<strong>on</strong> m3, and a 100 km l<strong>on</strong>g gas pipelinenetwork in South Serbia. The total value of the investment is estimated to be EUR 50.5 milli<strong>on</strong>.siannatural gas to the Black Sea to Bulgaria and further still to Italy and Austria. The Serbian legwould run from Zaječar to Belgrade and from there to Subotica. From Subotica <strong>on</strong>e branch runs toAustria ending at the Baumgarten gas hub, while the other branch c<strong>on</strong>tinues through Hungary andSlovenia to Arnoldstein in Austria near the Italian border to supply northern Italy. The first agreementbetween Russia and Serbia was signed even before the announcement of the South Streamproject. On 20 December 2006, “Gazprom” and “Srbijagas” agreed to c<strong>on</strong>duct a study <strong>on</strong> the c<strong>on</strong>structi<strong>on</strong>of a gas pipeline running from Bulgaria to Serbia. On 25 January 2008, Russia and Serbiasigned an agreement to route a northern pipe from the South Stream through Serbia which wouldcreate a joint company to build the Serbian secti<strong>on</strong> of the pipeline and a large gas storage facility nearBanatski Dvor in Serbia. On 15 May 2009, in Sochi (Russia), the gas companies of Russia, Italy, Bulgaria,Serbia and Greece signed an agreement <strong>on</strong> the c<strong>on</strong>structi<strong>on</strong> of the South Stream pipeline. As perthe earlier 2008 agreement, <strong>on</strong> 17 November 2009, Russia’s “Gazprom” and Serbia’s “Srbijagas” createdthe company South Stream Serbia AG in Bern, Switzerland. The joint engineering company wasset up to prepare a feasibility study for the Serbian secti<strong>on</strong> of project. If an agreement <strong>on</strong> investmentis reached, the new joint venture will also be resp<strong>on</strong>sible for the design, financing and the subsequentc<strong>on</strong>structi<strong>on</strong> and operati<strong>on</strong> of the pipeline in Serbia. The project is due to be completed by 2015.which is expected to be finalized by the end of January <strong>2010</strong>. The investment made in the completi<strong>on</strong>of the first phase (which should allow the storage of some 300 milli<strong>on</strong> m3 of natural gas) amountsto some EUR 25 milli<strong>on</strong>. “Srbijagas and Gazprom” signed an agreement <strong>on</strong> the establishment of ajoint company which should finalize the sec<strong>on</strong>d phase of the c<strong>on</strong>structi<strong>on</strong> of Banatski Dvor, where“Srbijagas” holds a 49% share and “Gazprom” has a 51% shareholding. The capacity of Banatski Dvorafter the finalizati<strong>on</strong> of the phase two of the c<strong>on</strong>structi<strong>on</strong> is projected to be 8,000 milli<strong>on</strong> m 3 .21FOCUS ON ENERGYOil SubsectorThe oil subsector c<strong>on</strong>sists of the extracti<strong>on</strong> of domestic oil reserves in Serbia, the import of crude oil, thetransportati<strong>on</strong> of crude oil, the refining of oil derivatives, oil derivatives distributi<strong>on</strong>, sales and its export. Domesticoil producti<strong>on</strong> has never been sufficient to cover local needs and Serbia has always been an importerof oil, with imports amounting to some 81% of its total annual needs. In additi<strong>on</strong>, domestic producti<strong>on</strong> of oiland natural gas has been <strong>on</strong> the decline since 1996, mostly due to the low level of investment in the maintenanceof domestic producti<strong>on</strong>, and the low intensity of explorati<strong>on</strong> operati<strong>on</strong>s because of a lack of funds.