Republic of Srpska

FULFILMENT OF PUTIN'S PROMISE: The RS Government amends the law for Russians to have monopoly in the gas sector

Written by: Svjetlana Šurlan, Dejan Tovilović

The Proposal of the Law amending the Law on Gas will be discussed at one of the next sessions of the National Assembly of Republika Srpska after the local elections. The law is being amended with only one goal in mind- to allow the Russians to build two compressed gas facilities in Srpska - one in Zvornik and the other in Brod

Republika Srpska favors Russians in construction of gas facilities
“Russia is firmly determined to continue Balkan cooperation. Russian companies are already operating in the countries of the region, Macedonia, Bulgaria and Serbia, and intend to expand to other countries. Russia is interested in reconstruction and construction of power generation plants in the region, underground gas storages, for transit and for development of a regional  node for oil and gas distribution. It will make the region a very important energy point in the long run”, the Russian President Vladimir Putin openly promised to the heads of all countries in the Balkans in June 2007 at the Energy Summit of the Heads of South-East European Countries in Zagreb. 
 
Many did not take that announcement seriously then. 
 

Photo: Putin in Zagreb 
 
Thirteen years of establishing domination
 
Russia has been working for 13 years to realize Putin's intention to establish Russia's dominance in the oil and gas sector in the region. It all started five months before the Zagreb Summit. The sale of the oil industry of Republika Srpska to the Russian company “NeftGazinKor” was initialed in Moscow in January 2017, and in February of the same year a contract was signed in Banja Luka.
 
A year later (2008), Russian “Gazprom” became the majority owner of the Oil Industry of Serbia (NIS), and in return, the Russians promised, without guarantees, the construction of the South Stream through Serbia and the gas storage Banatski Dvor.
 
The oil sector was “covered” fairly quickly, and after the failure with the South Stream and the transfer to “TurkStream”, Russians, after Serbia, intensified the business operations of in the RS gas sector.
 

(Milorad Dodik and Alexei Miller)
 
The prospects for broadening the cooperation were discussed a year ago in St. Petersburg at the meeting of the then-chairman of the BiH Presidency, Milorad Dodik, and the chairman of the Management Committee of “Gazprom”, Alexei Miller.
 
It was shortly reported that it “entails the possibility of supplying Bosnia and Herzegovina with the Russian gas that will be delivered to Europe via the TurkStream gas pipeline”. 
 
It is known that Dodik, although elected to the BiH Presidency, decides on behalf of the Government of RS, which continues to wholeheartedly accommodate the Russians so they could achieve their goals, although their previous actions had left behind never fully realized agreement on sale of the oil industry, closed refineries and millions in debt.
 
That did not stop the authorities of Srpska from continuing to favor the Russians and give them a monopoly, this time in the gas sector.
 

Amendments to the Law on Gas at the request of Russians
 
It is certain that after the local elections the Proposal of the Law amending the Law on Gas will be discussed at one of the next sessions of the National Assembly of Republika Srpska.
 
The law is being amended with only one goal in mind- to allow the Russians to build two compressed gas facilities in Srpska - one in Zvornik and the other in Brod.
 
The proposal of the Law, which we have in our possession, introduces the term “compressed gas” and “operator of the gas compressor facility” to the legislation for the first time
 
It is interesting that in the part of the law that defines the issuance of licenses for performance of activities in the natural gas sector (Article 9) a new paragraph is added allowing the energy operator to work for up to 12 months without a license.
 
The existence of gas suppliers with public service obligation is erased from the part that defines participants in the natural gas market and new participants are added: “operator of the natural gas liquefaction facility” and “operator of the natural gas compressor facility”.  
 
As for the suppliers with the public service obligation, the new law defines, as before, that the Government of RS will on the basis of the conducted public call appoint the supplier with the public service obligation to supply natural gas to the households. In the event that a supplier is not selected through a public call, the Government shall directly designate a supplier with the public service obligation. But, it was deleted that the Government determines the conditions of supply.

This opens space for the Russians to determine the conditions, i.e. the supply price, and it is confirmed in another provision of the law that is being deleted. Namely, the Government has decided to delete the obligation of suppliers to publicly announce the prices they apply from the existing law. They realized that another provision could be a problem and it was quickly removed. It was the provision that sets forth that “the price regulation is available to ensure the supply of households.”

The provision prescribing that the Regulatory Commission adopts an action plan that clearly indicates timeliness of regulating the prices of natural gas supply in the public service obligation is also deleted.
 
A provision is introduced that stipulates that the supplier with the public service obligation is selected for the period of five years.
 
So, the bottom line is to create a legal basis for the Russians to build gas plants, which they have already announced, to give them a certain freedom in price setting, to guarantee them work without a permit for up to a year and to provide them with a monopoly on household gas supply for up to five years.


The RS authorities provided information on the Russian plan in the gas sector selectively
 
The compressed gas facility in Zvornik was first time mentioned three years ago when the then-acting director of the enterprise “Gas-Res” Slobodan Puhalac and the president of the Management Committee of the Russian company “Gazprom SPG Technologies” Alexei Konstantinovich Kahidze signed an agreement and a letter of intent on establishing a joint company. The construction of a factory in Zvornik, as well as an investment worth around 70 million Euro, was also announced. The RS Government has not provided any new information since then. 
 

(Signing ceremony ''Gas-Res'' i ''Gazprom SPG Technologies“)
 
A year later (2018), a location was found, but once the architects and engineers of “Gazprom” came to the site it was determined that there was a power line on the plot planned for construction of the plant, which was not in the land records, wrote the portal Capital.ba.
 
The search for a new location ended, and the purchase of land was completed a few months ago.
 
The information that the Oil Refinery in Brod plans to start using gas was announced three years ago when the Protocol on cooperation in the implementation of the project “Natural gas supply to the end customer - Oil Refinery Brod” was signed. 
 
However, only at the end of August this year was the construction of gas compressor stations i release of compressed gas in the period February-April 2021 mentioned at one of the meetings of Minister of Physical Planning, Construction and Ecology of RS Srebrenka Golić, Deputy General Director of “Zarubezhneft” Igor Shelkunov and General Director of the Oil Refinery Brod Anatoli Karaljus.
 
Conditions have been created to amend the Law on Gas.
 
 
Đokić admits that the law is being amended because of Russians
 
The RS Ministry of Energy and Mining, headed by Petar Đokić, says that the gasification of the Oil Refinery Brod is coming to an end, that location conditions are being issued for the gas compressor station in Brod, and that the project in Zvornik is in the pre-investment phase.

“The activities on construction of 1.850-meter-long pipeline, which is 200 mm in diameter, are underway in the Oil Refinery Brod. This marks the beginning of the second phase of the gasification project. Completion of activities on the installation of pipelines on the company grounds is planned by the end of 2020. The overhaul of the bridge pipeline across the Sava River is also planned under this phase, as well as the connection to the main gas pipeline in Croatia”, stated Đokić.
 
A more detailed gasification plan, he said, will be known soon, because the results on the state of the product pipeline in Croatia will be known by the end of the year.

“As for the construction of the gas-compressor station and its commissioning, implementation of this project will enable the production of compressed natural gas and its further distribution. The project documentation has been prepared, and the procedures for obtaining location conditions and a construction permit are underway,” Đokić pointed out, suggesting that we contact the Refinery for more information. We did that, but there is no reply from the Optima group.
 

(Vladimir Putin and Petar Đokić) 
 
 
Đokić said that the gas facility project in Zvornik is “currently in a pre-investment phase” 
 
“The operation of gas facilities to be constructed will be entirely regulated by the Law amending the Law on Gas, which the RS National Assembly had adopted as a draft in July 2020,” admitted Đokić that Srpska is changing the legislation only because of Russian investors.
The City of Zvornik said that “Gazprom” has submitted a request for conversion of the agricultural land into building land and that they do not have new information about the project.
 
Director of the enterprise “Gas-Res” Ljubo Glamočić said that some activities concerning implementation of the “Gazprom” project have been just recently conducted.

“The new wave of the Coronavirus pandemic has stopped everything again. You see the situation we are in. According to the information we have, “Gazprom” and its employees are working from home again and everything is hampered. However, we are constantly in contact and our wish is to continue this project as soon as possible”, said Glamočić.
“Gazprom” and its branch offices were not in the mood to answer any questions about the project in Zvornik.


Dependence of Russian gas
 
According to the data of the BiH Indirect Taxation Authority entire quantities of natural gas, in gaseous state, has been imported from Russia. The value of Russian gas imported to BiH over the past four years exceeds 430 million KM.
 

(Imports of natural gas from Russia by years)
 
Only a portion of gaseous natural gas, worth just 5,233.31 KM ,was imported from other countries, Italy and Serbia over the given years. 
The quantity of imported liquified natural gas is also small. The value of liquified gas imported to BiH over the last four years is only 5,363.19 KM.
The data show that the gas currently transported through the BiH gas network, which is mostly on the territory of FBiH, comes from Russia, and it will apparently also be transported through the network that is to be built in RS.
 
In May of 2019 the RS Government gave its consent for the construction of the main gas pipeline from the border with Serbia on the route Bijeljina - Banja Luka - Prijedor - Novi Grad, 325 kilometers long, which was called a “national project of strategic importance”.
 
This project, in addition to the main gas pipeline, also includes the construction of thermal power plants - gas heating plants, the construction of a distribution network and gas distribution to all cities and municipalities along the main gas pipeline. The gas pipeline will follow the route of Belgrade-Banja Luka highway, and the connection of consumers in Bijeljina, Brčko, Modriča, Brod, Doboj, Prnjavor, Banja Luka, Prijedor and Novi Grad is also planned, together with the transition of city heat plants to natural gas.
 
In this regard, the National Assembly of the Republika Srpska made decisions on the development of a subdivision plan for the highway and gas pipeline section Vukosavlje - Brčko - Rača and on the adoption of a portion of the plan for the section Brčko - Bijeljina - Rača.
 
 
                           Volume of gas reduced by a factor of 600
 
The facilities built by Russian enable the gas to be converted from gaseous to liquid state. 
 
“The volume of gas is thus reduced by a factor of 600 and then its transport is really cheap. Furthermore, the gas to liquid transition phase generates energy that can be used either for heating or cooling. It creates possibilities to build cold storage or power producing plant in addition to the planned facilities”, that is how Duško Perović, head of the RS Representative Office in Russia, and an advocate of Russian investors’ interests, had earlier described the purpose of planned gas facilities.
                                        
 
                                           Competition 
 
The Russian monopoly in the gas sector in BiH can for now only be interrupted by the “South Interconnection” project, which was recently promoted in Sarajevo. The project is worth 196 million KM, and envisages the construction of a gas pipeline in the length of 180 kilometers, of which 160 are in BiH. It should connect the current transport gas pipeline of BiH with the Croatian gas pipeline system on the stretch Zagvozd-Imotski-Posušje-Novi Travnik, with a branch to Mostar. It was stated that the project will ensure security of gas supply in BiH and enable new sources of natural gas supply in BiH.
 
“This project is important for BiH since the connection to the Croatian gas pipeline network will enable a diversified source of natural gas supply, increase security of supply and improve the BiH compliance with the obligations of the EU Energy Community. Security of supply and diversification of sources make the country more independent. And not only that - the availability and increased use of natural gas will have a positive impact on the environment,” said US Ambassador to BiH Eric Nelson.
 
The FBiH Government adopted the Law on South Interconnection at the end of October, and is working on drafting the Law on Natural Gas of the Federation of BiH.
 
 
(zurnal.info)