Serbia allows connection to Druzhba oil pipeline

BELGRADE, 7 Oct – PRIME. The Serbian authorities, in light of the new package of EU sanctions against the Russian Federation, which prevent the delivery of oil from the Russian Federation through Croatia, are considering the possibility of connecting to the Druzhba oil pipeline in Hungary, the Serbian Ministry of Mining and Energy said.

The EU on Thursday introduced the eighth package of anti-Russian sanctions, which includes both new economic restrictions and expanded lists of personal sanctions. Among the economic sanctions is the introduction of a legislative framework for determining the price ceiling for sea transportation of Russian oil to third countries. It is planned that the price limit will be introduced on December 5 for oil and on February 5, 2023 for oil products.

The package of measures was actively supported by Croatia, where the port of Omišalj is located on the island of Krk in the Adriatic Sea with a terminal for receiving tankers with oil and oil products. From there, the oil is sent via a pipeline to Serbia for processing at the plant of the Oil Industry of Serbia (NIS), which is 56.15% owned by the companies of the Gazprom group. Serbian Interior Minister Alexander Vulin said on Thursday that the EU, with the eighth package of sanctions against Russia, is introducing the first package of sanctions against Serbia, which depends on Russian oil supplies through Croatia.

“The plan is to diversify the supply of crude oil by connecting to the Druzhba pipeline. There are two options for connecting to it. The first is to lay a pipeline to Szeged, to Aldieu. The length of this oil pipeline, which would partially provide the volumes of the oil refinery in Pančevo, was about 128 kilometers, of which 104 kilometers are on the territory of Serbia, the investment is about 83 million euros, 64 of them on our territory,” the Serbian Ministry of Energy said.

“The second option for connecting to Druzhba near Budapest is the construction of an oil pipeline from Novi Sad to Sazkhalombatta with a length of 400 kilometers, the estimated cost is about 240 million euros. Connection to the Druzhba oil pipeline also means the possibility that the Serbian market will continue to receive Russian oil,” the statement said.

It is noted that both options are currently being analyzed and the Serbian government will have to decide on the construction of a new oil pipeline, the volume of which “will be coordinated with the processing volume of the refinery in Pancevo.”

Serbian Prime Minister Ana Brnabic said on Friday that a ban on oil supplies from Russia by tankers and pumping through Croatia would increase Serbia’s costs for the purchase of raw materials by 20% and bring hundreds of millions of euros in losses to the country’s budget.

The state-owned operator of the JANAF oil pipeline in Croatia announced on April 22 that it would continue to supply raw materials to NIS after being withdrawn from the EU sanctions package. In January, NIS signed a new annual contract with JANAF for the supply of 3.2 million tons of crude oil.

On August 21, Serbian President Aleksandar Vucic reminded citizens that from November 1, due to sanctions, Serbia will not be able to receive oil from Russia, which is delivered to the country by tankers through the Adriatic Sea, and then through an oil pipeline through Croatia. Vucic said at the end of June that Serbia, due to Western sanctions on oil supplies by tankers from Russia, should find an alternative to Russian oil.