Serbia Launches Underground Gas Depot to Boost Energy Stability

Serbia launched its first natural gas underground depot to guard against delivery disruptions and price shocks from Russia which provides the Balkan country with all of its gas supplies.

Serbia initiated work in 2009 on the Banatski Dvor natural gas reservoir with an active capacity of 450 million cubic meters and a maximum productivity of extracting 5 million cubic meters of gas a day to help cut reliance on gas deliveries that arrive via Ukraine and Hungary, enabling stable supplies to industrial consumers and households.

“This is one of the biggest investments in the Balkans,” Gazprom Neft Chairman Alexey Miller said at the opening.

An upgrade of Banatski Dvor was part of a wider energy pact between Serbia and Russia, under which the Balkan country sold a 51 percent stake in its oil and gas monopoly Naftna Industrija Srbije AD to Russia’s OAO GazpromNeft, with Belgrade getting a pledge to be included in the South Stream gas pipeline.

The 400-kilometer (250-mile) South Stream arm through Serbia, estimated to cost 1.38 billion euros ($1.85 billion), will have a transit capacity of 34 billion square meters of gas a year. Serbia hopes work will begin before year’s end.

Miller also attended the opening of a new command room at the Pancevo refinery, the bigger of Serbia’s two crude oil refining facilities, as part of an upgrade program worth nearly 396 million euros ($532.8 million). The upgrade introduces hydro-cracking and hydro-processing to allow the refinery to improve the quality of the fuel to match European Union standards.

The refinery upgrade is due to be completed in 2012, allowing more exports to neighboring markets in the Balkans.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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