BiH: Conceptualizing gas supply between diversification and policy

BiH: Conceptualizing gas supply between diversification and policy

For several decades, the only natural gas entrance in BiH has been near the city of Zvornik at the BiH-Serbian Border, and is connected to the gas pipeline that supplies Serbia with gas from Russia.

Interestingly, the connection in Zvornik suffered major interruptions during the war. As natural gas reached a large number of households in Sarajevo, for many of them it was a lifeline given their living conditions at the time.

Today, the “Zvornik connection” still operates, however the diversification of supply sources has been under consideration for years. It has been almost ten years since Republika Srpska announced it would be connecting to what was then the “South Stream”, a project that failed ingloriously. Work is now underway to connect the pipeline to “Turkish Stream”, which in a way inherited the previous project, with the entrance expected to be located near the city of Bijeljina. Republika Srpska-based company “Gas Res” is scheduled to work on the gas supply of this BiH entity.

In addition, the company “BiH Gas” operating in the Federation of BiH is planning a South Interconnection project on the border with Croatia, in order to supply this part of BiH with gas from Europe, but also from the new LNG terminal on the island of Krk in Croatia.

The company states that the South Interconnection project is not just a connection to the Krk terminal, but is rather dedicated to fully diversifying supply sources and raising the security coefficients of BiH’s natural gas supply to meet the EU standards in this area.

“The South Interconnection project is included in all Energy Plans and Strategies of BiH; ten-year plans on the neighbouring gas transport operator in the Republic of Croatia. It is on the list of priority projects of the Energy Community, and it is supported by the European Commission and the EU. This interconnection should be completed by the end of 2024,” the company told IBNA.

BiH Gas is committed to and supports the construction of new natural gas interconnections/inputs to increase supply security and diversify sources, yet this implies new natural gas inputs from different directions. In that context, the company stressed that it is rather important for BiH to provide new natural gas inputs from different directions, in order to ensure the security of supply and the element of choice, while the market will determine the prices of this energy source.

As the best example of the need to diversify natural gas entries into BiH, they cite the “gas crisis” between Ukraine and Russia, when BiH was left without gas supply for 72 hours due to the fact that there was only one supply route available, the one via Zvornik.

“Currently, we are working on BiH having two natural gas inputs (the already existing one and the future South Interconnection). Referring the Brod Refinery as a possible third input/interconnection has no basis when it comes to the BiH gas story,” they say in BiH Gas.

However, just a few days ago, Brod Refinery installed pipes under the Sava riverbed, which connects it to the gas pipeline in Croatia and switches to gas as an energy source. They are currently working on the design of a gas collection compressor station with a capacity of up to 40 million m3, expected to commence operations in March next year. Gas was elected as a more environmentally friendly fuel for the operation of the Refinery.

“Compressed gas will be available to end-consumers on a 24-hours basis, regardless of whether those are industrial, commercial facilities, administrative or communal buildings, schools or healthcare facilities,” Brod Refinery told IBNA.

This practically means that this part of BiH will also receive gas for commercial and not only consumption in the Refinery. The entrance of this gas pipeline is located at where the so-called “North Interconnection” should be.

From this point on, things in the diversification of natural gas inputs in BiH become political.

BiH Gas claims that, in the plans for the development of gas interconnections of the European Union within the project South European Gas Ring, the so-called EC RING refers exactly to the North Interconnection, the Slobodnica (CRO)-Brod-Zenica route planned as an international gas interconnection, and as such it should be of strategic interest to the state of BiH. South Interconnection should receive its continuation towards Brod, and thus a transport/transit gas pipeline would pass through BiH, which would create the “South European gas ring”, also found on the European gas maps.

“Despite all indicators of cost-effectiveness of the North Interconnection project, Republika Srpska refused to participate in its implementation and refused to give consent to build a transport pipeline through their territory. Connecting gas systems in the south and north of BiH with the construction of a transport pipeline through BiH under the auspices of Croatia would enable the RS to utilize this connection to supply the whole of BiH. By declining to exploit all benefits of such a transport/transit gas pipeline, the RS unilaterally started the process of connecting the Brod Refinery to the Croatian gas network,” claims BH Gas.

They add that, by connecting one branch of the gas pipeline from Croatia to the Refinery, the entire project is limited to just one industrial plant instead of solving supply security issues for the entire of BiH. At the same time:

  • Access to the entire BiH gas market is limited, all with the aim of safe delivery of this energy source,
  • The possibility of securing a second entrance for gas supply to the entire country is lost,
  • EU directives are fundamentally violated.

Furthermore, according to the company, no study, development plan or initiative by the EU, the Energy Community or BiH has planned for such a connection of the gas network between the two countries; this represents a unique example in the world and, therefore, “neither the residents of the Federation nor of the whole of BiH benefit from this connection, apart from the fact that it will secure profits to some gas wholesaler.”

Gas Res, a natural gas distribution company operating in Republika Srpska, believes that the future interconnection on the border with Serbia and the continuation of the purchase of gas from Russian company “Gazprom Export” should not be a problem for anyone in BiH or abroad.

“Diversification of sources is mentioned in all expert analyses as one of the important preconditions for the development of the gas sector; however, geopolitical influence is often associated with this term. For Republika Srpska and BiH as a poorly developed gas market overall, more supply sources should translate to more competitiveness, and thus lower gas prices and reduction of risks from other conditions. The Republic of Srpska Energy Development Strategy until 2035, which defines the direction of supply from the Republic of Serbia, constitutes a priority for Gas Res. We believe that other supply directions do not jeopardize this strategic commitment of Gas Res,” they say in the company.

Their ideas regarding gasification in BiH appear to be, to say the least, somewhat different from those in “BH Gas”. Gas Res, as the Group in charge of the realization of this project, and in accordance with the relevant documents and decisions by the Government of Republika Srpska, adopted the Conceptual solutions of the route and initiated the adoption of the Parcel Plan for the gas pipeline from the border of the Republic of Serbia near Bijeljina to Brčko and from Brčko to Vukosavlje. What is more, it is envisaged that the new input interconnection, using the Šepak (Zvornik)-Bijeljina gas pipeline, will be connected to the existing gas system in BiH in a way that this connection will be reversible.

“This would form some kind of gas ring which would render gas from the new interconnection available to consumers in the eastern part of the Republika Srpska and the Federation of BiH, and through the old interconnection gas it could be transported to Bijeljina and further to the west. Such a connection would create a perspective for the stable development of the gas sector in the Republika Srpska and Bosnia and Herzegovina,” the company told IBNA.

Although the Brod Refinery says the gas they import from Croatia will be available to other consumers and not only to this company, Gas Res do not consider them a “third entry” of gas into BiH. They clarify that this concerns gas supplies for the needs of the Refinery.

“As far as we know, the Brod Refinery has been approved by the competent authorities of the Republika Srpska for gasification from Croatia exclusively for the supply of natural gas to the Brod Oil Refinery as a direct line, taking parallelly into consideration the urgency of resolving environmental problems. Gas Res as a direct importer do not need to procure natural gas from anyone within Bosnia and Herzegovina, not even from the Brod Oil Refinery. In addition, since 2015, Gas Res has repeatedly offered Brod Refinery the supply of compressed natural gas to road transport by mobile tanks,” Gas Res points out.

Therefore, from the three companies importing gas in BiH, we received different answers as to the directions of gasification in BiH. The market is small and the mode of gasification will most likely, like everything else in BiH, be decided by politics and not the economy. /ibna