By CEV Magazine team

Just four months after the Serbian public has been assured the gas agreement with Russia also includes the "Banatski Dvor" underground gas storage construction, this assertion has become questionable. "Srbijagas" General Manager Dusan Bajatovic has announced the arrival of the Gazprom delegation for talks with the Serbian representatives on possible Russian partner participation in construction completion of underground storage "Banatski Dvor," the total capacity of 800 million cubic metres. The term "possible participation" has echoed in the ears of everybody who have doubted the Serbian representative`s assurances that agreements on the South Stream pipeline and "Banatski Dvor" storage construction would be signed although the Major Provisions of the Basic Cooperation Agreement on the Serbia`s Petrol Industry (NIS) sale has not been signed.

Only those who have read Memorandum made between Gazprom Export and "Srbijagas" know that the December politicians` announcements on the Russian investments in "Banatski Dvor" to be the regional distributive gas centre were partially correct. According to the Memorandum, by July 1st, 2009 decision should be made on whether the gas storage "Banatski Dvor" equipment and exploitation project would be realised. However, the Russian party has not undertaken this investment and made it for "Srbijagas" impossible to negotiate with other investors on this project.

In compliance with this, Dusan Bajatovic said that in the meantime „Srbijagas" would invest in the "Banatski Dvor" completion according to its capabilities and be prepared for the next heating season and possible gas crisis.

However, upon the NIS shares sale Serbia has not insisted on immediate agreement signing regarding gas storage. On the other hand, neighbouring Hungary has recently signed several agreements with Russia on construction of the Hungarian part of the South Stream gas pipeline as well as an underground gas storage capacity of 1.3 billion cubic metres with daily capacity of 15 million cubic metres of gas.

This new has made many analysts conclude that Serbia is late with signing the agreement with the Russian partners as well as that the Hungarian agreement lessens the chances for "Banatski Dvor" to be regional gas depot enabling Serbia to acquire solid earnings.

According to Zorana Mihajlovic-Milanovic, an independent energy expert, for the time being, at best, "Banatski Dvor" could be operational gas storage for "Srbijagas" to siphon out the Russian gas. She points out that the Serbian party has made a mistake at signing the interstate agreement with Russia for not signing also the agreement on "Banatski Dvor" construction completion. Instead, it has signed the memorandum that is not obligatory.

However, the "Srbijagas" Director denies that "Banatski Dvor" will not be the regional gas depot adding that this storage will be ready for the next winter season by November 1st.

"No agreement between Gazprom and Hungarians will jeopardise `Banatski Dvor`," remarked Bajatovic adding that the recent gas crisis has been quite a lesson for everybody.

However, according to the recent statement made by the Serbian Prime Minister Mirko Cvetkovic, some 500 million euros are needed for filling the storage with gas and additional 22 million for infrastructure construction. Although the part of this money will be secured out of the National Investment Plan, Serbia effectively has no money for such investments.

Solution for this problem can be either for the Russians to accept joint investments in the underground gas depot or for Serbia to secure commercial credit for this investment, something the "Srbijagas" representatives have been negotiating about with the German KfW development bank.

Currently there are 120 million cubic metres of gas in the storage and the officials say it has been planned for 470 million cubic metres excluding so-called pillow gas.

In case there were no additional investments in infrastructure, Serbia could get five million cubic metres of gas daily that are sufficient only for main heating plants and individual households` supplies. Energy experts maintain Serbia should urgently invest in gas pipelines between local sources and the "Banatski Dvor" storage.

In relation with the underground gas depots capacities, the European Union states have different level of energy dependence. An average European country has a gas storage capacity that can meet the needs of the country`s 19 days gas supply.

Under the European average are the capacities of depots in Great Britain, Belgium, and Greece, as well as in Switzerland that is not the EU member. The uniqueness of Great Britain, one of the biggest world economies, is in its depots being sufficient for only 10 days gas supplies. However, this could be explained by Great Britain importing gas for only a couple of years now and therefore the investments in gas storages not being the priority for the time being.

While Belgium has gas storage sufficient for only eight and a half days supplies, Germany has depots for 34 days, France for 48 days, and Poland for 34 days.

Otherwise, two biggest underground gas storages in the European Union are in Germany - Rehden with four billion cubic metres of gas capacity and Doetlingen, capacity of two billion cubic metres.

New gas storage of 1.3 billion cubic metres capacity that is going to be built in Hungary from 2010 jointly by the Gazprom and MOL will enable Hungary to enlarge gas depots and meet half of the Hungarian yearly needs. For the time being, Hungary imports form Russia 70 percent of its gas needs but with this investment it is trying to improve its energy security.

One fourth of its gas needs the EU produces, it imports one fourth from Russia, 16 percent from Norway, 15 percent from Algeria, while the rest comes form Libya, Nigeria and Central Asia. Out of the common perspective, the Union dependence of the Russian gas is not the dramatic one, but in case the percentage of the imported Russian gas is considered from the individual point of view of every country, the situation is different. Spain does not import the Russian gas at all, while Poland, Estonia, Latvia, Lithuania, and Finland import from Russia their total gas needs.

In the recent study of Stefano Braghiroli and Caterina Carta, regarding their loyalty level to Russia in their mutual energy relations, the EU members are divided in four categories.

With the first extreme category come "Eastern divorced" countries of the former Soviet block that are currently hostile towards Moscow (Poland, Estonia, Latvia, Lithuania, the Czech Republic, and Slovakia).

The second group consists of "loyal wives" (Italy, Austria, and Greece) that maintain good relations with Russia, while to the third category belong "vigilant critics" (Slovenia, Romania, Sweden, Bulgaria, Hungary, and Great Britain). The fourth and the biggest group is made of the "acquiescent partners" (Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg, the Netherlands, Portugal, and Spain).

However, Serbia is not on this list. Nevertheless, if it keeps on being late in signing the agreement on the South Stream pipeline construction and investments in "Banatski Dvor" it could make an entirely new category of the "loyal child" in the energy relations with Russia.