Why is Pancevo refinery of key importance for Serbia's survival in global crisis?

Pancevo refinery; Photo : Emilija Jovanovic

Former Assistant Minister of Energy Rasa Kojicic has told RTS that Serbia has a good level of energy reserves, but that global supply disruptions can change that. Commenting on the negotiations with MOL (for acquisition of majority stake in NIS), he said that the Pancevo refinery is of great importance for Serbia because, unlike most countries in the region, Serbia is landlocked.

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Serbian President Aleksandar Vucic announced that he will hold meetings to discuss energy reserves as soon as he returns from Baku. Vucic said that unless reserves are secured now, "we won't have enought for the summer, let alone for the winter".

Rasa Kojicic told RTS this morning that energy reserves are currently good, but that we should constantly work on securing them, especially in light of the events in the Persian Gulf.

"In the previous period, a lot has been done to secure significant amounts of reserves, in order to be able to react in such situations," Kojicic said, recalling that 20 percent of the total amount of crude oil was supplied through the Strait of Hormuz before the war.

Serbia previously made sure to have enough energy stored in mandatory and operational reserves so that it could function in a stable manner.

"You could see that there have been no shortages at gas stations at any point, and no one (in Serbia) felt the effects of the global crisis," said Kojicic.

Price of oil sensitive to political statements

Still, problems may arise due to global supply disruptions.

"When the supply through the Persian Gulf is interrupted, everyone who gets their oil through there will look for other sources," said Kojicic.

The price of Brent oil was 112 dollars yesterday, while natural gas jumped to 600 dollars.

Kojicic stressed that after that news, US President Donald Trump declared that negotiations with Iran are continuing and that the ceasefire was extended - which then led to Brent immediately falling to $108 per barrel.

Banatski Dvor gas storage is filled

When it comes to natural gas, Serbia has a stable supply thanks to the agreement with Gazprom.

"We are safe there, and the storage capacity in Banatski Dvor is at its maximum, we have a storage facility in Hungary as well and a stable inflow via the Turkish (Stream) and then the Balkan Stream on a daily basis, plus the quantities from Azerbaijan," explained Kojicic.

Kojicic added that work is ongoing on several projects that will allow Serbia to become a hub in this part of the world.

"We are working on an interconnection with Romania, an interconnection with North Macedonia in order to link with Greece, an oil pipeline to Hungary is under construction. When all those investments are finished, we will become a hub for gas supply and some other markets," said Kojicic.

Why is Pancevo refinery so important

Asked if the solution to the issue of NIS is even more important now because of the global events, Kojicic explained that NIS is important from the point of view of security of supply of all kinds of derivatives and energy products obtained from crude oil.

On the other hand, 13,000 people are employed by NIS, and then there are those who who work for companies that cooperate with NIS.

This former government official pointed out that the refinery, which is the "red line" when it comes to NIS sale negotiations, is important for supplying our market.

"They say we can get (sufficient) supplies without the refinery - we cannot. If the daily quantities of derivatives that are needed for normal functioning are calculated, it's physically and logistically impossible to deliver them either via the Danube, the railway, or tanker trucks. Regional countries do not have their refineries but all of them have access to the sea, and large tankers bring in oil," explained Kojicic.

(Telegraf Biznis/RTS)