Focus on Energy, 2010 - Karanovic & Nikolic

many announcements regarding oil pipeline projects (AMBO, east-west corridor, south-north corridor),but so far the only pipeline in Macedonia is the Thessaloniki – Skopje pipeline, built by “Hellenic Petroleum”in the late 1990s’. Since 1999, the Greek national company also owns the only refinery in thecountry (“Okta a.d.”). 7Regarding the oil product market, “Okta a.d.” is the only domestic producer. The 28-year-old refineryis using old technology and this impacts heavily on the surrounding environment. In the near future,the refinery will have to be modernized, especially with regards to its compliance with environmentalregulations.Russian “Lukoil” has entered the market recently, and currently operates 10 modern outlets. The companyintends to open another 30 during the next couple of years, becoming the most significant competitorin the supply of domestic oil products (competing with both “Okta a.d.” and “Makpetrol” a.d.).There have been no announcements of new projects, but projects on pipeline corridors that route troughMacedonia will remain as a strategic objective for the future. As the transportation infrastructure isunderdeveloped (particularly the railways to Serbia and Bulgaria), this is further limiting the possibilitiesfor the development of the region.Coal46Coal mining is essential to the country’s energy security seeing as coal is the primary fuel for electricityproduction in Macedonia. Two open-pit mines “Suvodol” and “Brod-Gneotino” are providing fuel for over98% of the domestic TPP electricity production. The state electricity producer ELEM operates the minesthat supply the “Bitola” and “Oslomej” TPPs, with up to 8 Mt of lignite per year. The feasibility studiesconducted over the last 10 years show that there are possibilities for new lignite mining, and accordingto ELEM, there are plans to open new mines in the region of Mariovo in central Macedonia. This project,currently only in its preparation stage, also envisages a TPP with an installed capacity of 300 MW.FOCUS ON ENERGYInvestments in the sector are both expected and very important, considering the significance of the coalfor the domestic electricity generation. Currently, the “Bitola” TPP’s mine “Suvodol” is using the last ofits reserves. Together with the production of the other lignite mine “Brod-Gneotino” (which is estimatedto be producing 2 Mt per year), the total coal production is only sufficient to serve the TPPs until 2025.This fact is concerning and should either result in immediate plans for projects with new capacities orin significant changes regarding the energy strategies for the future of Macedonia’s domestic electricityproduction.District Heating SystemThere are five district heating (“DH”) systems in Macedonia, 3 of which are in the capital Skopje, withone each in the towns of Bitola and Makedonska Kamenica. The major DH system in Skopje is ownedand operated by JSC “Toplifikacija a.d.” 8 with approximately 40,000 households served. Production capacities(560 MW installed power) 9 are fuelled by heavy fuel (mazute) and to a lesser extent by naturalgas. The other 4 systems are significantly smaller, together serving fewer households than the Skopje DHmain system. The ERC presents the DH prices and regulates the market in general.The domestic company “Toplifikacija a.d.”, together with the Russian company “Sintez” invested in theEUR 137 million CHP plant project (referred to in the Natural Gas section above). This plant is going tochange the fact that all DH systems to date are using inefficient heat-only boiler technology. The newcombined plant will produce 350 GWh of thermal energy and is supposed to set the CHP facility as amodel for the future development of the subsector.7 Read more on “Okta a.d.” in the “Participants” part8 Toplifikacija a.d.from Skopje is private company, controlled by Slovenian group9 Toplifikacija a.d.’s web site: http://toplif.com.mk/home.htm