Energetics: Oil, gas and electricity - what will we do in the winter?

Together with the leaders of Greece, Bulgaria, North Macedonia, and the US Ambassador to Greece, as well as the President of the European Council, Charles Michel, on Tuesday, the President of Serbia attended the beginning of the construction of the liquefied natural gas (LNG) terminal in Alexandroupolis, Greece.

"All European countries must cooperate and oppose Russian blackmail regarding natural gas," said Greek Prime Minister Kyriakos Mitsotakis, adding that Moscow's recent blackmail made this cooperation not only necessary, but also urgent.

The ceremony came a week after Russia cut off the flow of natural gas to Poland and Bulgaria, which refused to pay for gas in Russian rubles.
On the same day, on Tuesday, the head of European diplomacy, Josep Borrell, announced the sixth package of EU sanctions against Russia, which would include, among other things, an embargo on Russian oil.
Europeans can more easily give up Russian oil than Russian gas, given that 26 percent of total oil imports come from Russia, unlike gas, where 40 percent of Europe's gas needs are covered from Russia.

It has already been mentioned that countries like Slovakia or Hungary, which are significantly more dependent on Russian oil, could be exempted from this package. On the other hand, Germany announced that since the end of February, when Russia attacked Ukraine, it has reduced the share of Russian oil in its consumption from 35 to 12 percent.
Where is Serbia?

The aforementioned LPG terminal in Greece should start operating at the end of 2023. Its capacity will be 5,5 billion cubic meters of gas per year, and that should be "divided" among many interested parties. For the sake of comparison, only Serbia's needs in 2021 were slightly below 2,5 billion cubic meters of gas, of which 85 percent came from imports, i.e. from Russia.

Serbia, that is, NIS, were somehow "bypassed" in the fifth package of sanctions that the EU introduced in March, given that the Adriatic Oil Pipeline (JANAF) then announced that it would no longer be able to send oil to NIS, because it was in majority Russian ownership.

Serbian officials do not have answers to logical questions - where will Serbia get oil from if NIS "does not survive" the sixth package of sanctions; they say that the next winter will be very difficult, but they do not say how they will solve that problem; they do not even have a clear answer to the question of where Serbia will look for diversification of energy sources, that is, the import of energy sources without it being from Russia: it is not possible to plug such a "hole" in energy sources in many years; Minister Mihajlović mentions renewable energy sources, but that's a (too) long shot, it's not a solution for this type of problem; President Vučić - who, of course, has no business dealing with energy problems - says that "the country must have oil", but does not say how and from where.

Also, at the end of May 31, the existing contract between Serbia and Russia on the supply of gas (six million cubic meters per day) ends and a new one needs to be signed, because it is clear that an energy "turnaround" and reduction of energy dependence on Russia is not possible in the next few years. Considering the extremely high gas prices, which were in effect even before the Russian attack on Ukraine, it does not seem like a good option to sign a long-term contract now - assuming, of course, that gas prices do not continue to rise.

No matter what kind of contract is signed, it is clear that Serbia will pay significantly more for Russian gas than before. It is also certain that at least part of that price increase will be passed on to Srbijagas by the state. On the other hand, despite the record electricity prices on the market, citizens did not feel it on their electricity bills - even though Minister Mihajlović announces an increase in prices, here too it is certain that not all the burden will be transferred to consumers, i.e. that the price of electricity will continue to be social and not an economic category.

Thus, with the years-long destruction of EPS and the damage of at least half a billion euros caused by various "mice", due to which the largest company in the country was forced to import electricity in huge quantities at unprecedented prices, even after the price increase, EPS will not make money from electricity which it sells to citizens, and will have to take on additional debt. Since he will not be able to pay back all those debts, it is very likely that the state will backfire on both EPS and Srbijagas by taking over those debts. And they will be returned - by the citizens, and the old one about (non)payment on the bridge and on the bridge will be confirmed once again.

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