Focus on Energy, 2010 - Karanovic & Nikolic

annual figure of 6,100 million m3) to an annual figure of 6,800 million m3.Russian gas. In December 2006 the company ”Gazprom-Export” and the Serbian Ministry of Miningand Energy signed a memorandum of understanding on the construction of a 400 km long gaspipeline with a capacity of 20 billion m3s of natural gas through Serbia.with an annual capacity of 850 million m3 (covering 25% of the annual consumption in Serbia).CURRENT PROJECTSIn 2009, the governments of Serbia and Slovakia signed an agreement on the cooperation between companiesof the two countries in the development of the gas infrastructure in Serbia. This also provided forthe construction of a gas storage depot with a capacity of 500 million m3, and a 100 km long gas pipelinenetwork in South Serbia. The total value of the investment is estimated to be EUR 50.5 million.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 one branch runs toAustria ending at the Baumgarten gas hub, while the other branch continues 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 conduct a study on the constructionof 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 section 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 on the construction of the South Stream pipeline. As perthe earlier 2008 agreement, on 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 section of project. If an agreement on investmentis reached, the new joint venture will also be responsible for the design, financing and the subsequentconstruction and operation 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 2010. The investment made in the completionof the first phase (which should allow the storage of some 300 million m3 of natural gas) amountsto some EUR 25 million. “Srbijagas and Gazprom” signed an agreement on the establishment of ajoint company which should finalize the second phase of the construction of Banatski Dvor, where“Srbijagas” holds a 49% share and “Gazprom” has a 51% shareholding. The capacity of Banatski Dvorafter the finalization of the phase two of the construction is projected to be 8,000 million m 3 .21FOCUS ON ENERGYOil SubsectorThe oil subsector consists of the extraction of domestic oil reserves in Serbia, the import of crude oil, thetransportation of crude oil, the refining of oil derivatives, oil derivatives distribution, sales and its export. Domesticoil production 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 addition, domestic production of oiland natural gas has been on the decline since 1996, mostly due to the low level of investment in the maintenanceof domestic production, and the low intensity of exploration operations because of a lack of funds.