ROAD TO GREATER ENERGY SECURITY

The new Niš-Sofia gas pipeline is a key part of Serbia’s broader strategy to complete the ongoing liberalisation of the gas sector, but also an important element of Serbia’s progress on accession negotiations with the EU. The new gas interconnector will contribute considerably to energy security and a cleaner environment in Serbia.

Serbia is finally set to tackle the security of its gas supply and the diversification of supply routes and suppliers. This change comes with the construction of the Serbian section of the 171-kilometre natural gas interconnector between Serbia and Bulgaria. When it becomes operational in 2023, this new development will handle about two billion cubic metres of gas per year, thus contributing to the diversification of energy sources for Serbia and the region. Furthermore, it will ensure a stable energy supply that respects the environment and encourage the liberalisation of the market and investments.

The project is considered a priority project for the European Union and the Central and South-Eastern Europe Energy Connectivity (CESEC) initiative. The EU Delegation to Serbia is actively facilitating progress on this priority project, in close contact with the Serbian authorities.

Indeed, Bulgaria and Serbia already linked their gas networks at the end of 2020, with the idea of securing supplies of Russian gas from the TurkStream pipeline as of 2021. The 170km Bulgaria-Serbia interconnector, construction of which is set to start during 2021, is a separate project that provides Serbia with a non-Russian supply option. It will therefore contribute to diversifying energy sources in Serbia and the Western Balkan region, while reducing dependency on a single dominant supplier.

Energy security and supply reliability are imperatives for EU Member States and

The Niš-Sofia gas pipeline will contribute to the diversification of energy sources in Serbia and the Western Balkan region, as well as reducing dependency on a single dominant supplier

represent an important issue for Western Balkan countries. In order to reach the level of economic development attained by EU Member States, the countries of the region, Serbia included, will need to maintain their own energy security and reliability of supply by securing energy supplies from different directions and sources. By gradually harmonising its energy strategy with the strategy and directives of the EU, Serbia has a chance to turn its energy sector into a driver of economic development that relies on decarbonisation, green economy,

renewables and security of supply.

The pipeline will serve this task. It will have a capacity of 1.8 bcm/year downstream along the Bulgaria-Serbia route, with the possibility of also reversing the flow, and will run for around 62 km in Bulgaria and 108 km in Serbia. It will provide an additional 80% capacity increase relative to Serbia’s current gas needs. Furthermore, once completed, it should open the doors for a number of suppliers, such as LNG terminals in Greece, TAP and TANAP gas pipelines and possibly the Eastern Mediterranean gas pipeline, with gas sourced from Cyprus and Israel. The construction of the Niš-Dimitrovgrad gas pipeline will thus significantly increase the energy security of Serbia, but also the region. The final step in this project was the recent signing of the Agreement on the loan from the European Investment Bank (EIB) in May. The EIB loan of 25 million euros secured an initial €49.6 million of EU IPA grant funds to the Serbian side of the Niš-Sofia gas pipeline. In short, the financial foundations for construction are now set. The head of the EU Delegation to Serbia, Ambassador Sem Fabrizi, confirmed that the loan for the Niš -Dimitrovgrad pipeline was a “big

step forward” towards the realisation of the project.

As noted by Serbian Finance Minister Siniša Mali, investments in infrastructure are of great importance to Serbia, as they contribute to higher economic growth, which is particularly important amid the fallout from the coronavirus pandemic.

Energy transition is part of the EIB portfolio around the world. Serbia’s project is one of a few gas projects to be supported under the EIB energy lending policy agreed in 2019, before the bank shifted its focus to renewable only sources of energy from 2021. The EU previously supported the energy sector in Serbia with more than €830 million. From 2000 to date, the EIB has invested over €672 million in the energy sector of the Western Balkans. In combination with EU funds, this EU bank provides strong and long-term

financial support to the countries of the region and facilitates a shift to more energy efficient and diverse resources.

The energy sector is in the focus of the EU because it has a great impact on all other sectors in society. The projects that the EU is implementing in the energy sector aim to reduce dependency on fossil fuels, increase the use of renewables and increase energy efficiency. Serbia is the country with the highest percentage of coal of low calorific value (lignite) in electricity production, at about 65%. Some 21% of electricity produced in Serbia is currently generated from renewables.

The pipeline will allow easy gas access for citizens and businesses of Bela Palanka, Pirot and Dimitrovgrad – three towns that previously lacked access to gas