Energy Security of the Western Balkans: Oil & Gas

by Steva Miletić

Energy security is one of the basic priorities of the development of modern society. States strive to provide their economy with a satisfactory level of energy security, and to design, plan and implement it in accordance with their own needs and the specifics of the environment. The Western Balkans as a region is at the crossroads of east-west energy transport routes, and is faced with the simultaneous tasks of transforming its economic appearance and energy infrastructure: a process that creates unique opportunities but also challenges.

The Balkan countries can largely be characterized as energy-dependent countries. These are countries that mostly meet their needs from imports, and their energy security is largely based on coal, gas and petroleum products. In most countries, gas comes primarily from Russia via Ukraine. Two countries (Romania and Croatia) have a significant share of domestic gas, and the other two (Bulgaria and Serbia) have domestic, but in smaller quantities. What they have in common is the provision of sufficient supply on economically and energetically realistic bases. The European Union has been arguing for some time about the energy security of the Western Balkans. With regard to the latest conflicts in Ukraine and sharp confrontations between the EU and Russia, the question arises as to how the relations and cooperation between the two sides in energy cooperation and beyond will be further developed. This will certainly have negative effects on the Balkan countries as well.

As “tango takes two”, any aggravation or improvement of relations between the EU and Russia results in a threat or stability in the supply of European consumers. If the gas supplier refuses to provide gas or offers it at an unreasonably high price, the consumer is unable to react and turn to another source in a short period (the consumer will have no choice but to accept the bidder’s terms or continue “without gas” which is not acceptable). It is clear that it is not possible to achieve development if energy supply and demand do not meet, so the opinion that countries have energy resources in a better position does not correspond to reality. Will Russia, for example, benefit or harm from shutting off gas to Europe? Can he take with him billions worth and thousands of kilometers long gas pipelines – oil pipelines? What would happen to Russia’s economy if this country’s budget were reduced by 50% if EU countries stopped using and paying for gas? It is known that 94% of the total gas exports from Russia go to European countries. In Europe, Russian gas accounts for 38% of European imports. Projections of the future warn both, and the future must be taken into account today. The needs for gas imports to the EU (in 2030) will be increased by 5-6 times, in relation to its gas production.

The average annual growth rate of gas demand in the region of Southeast Europe will be 2.6%, but with large variations depending on the country. Gas needs will lead to a 72% increase in projected demand by 2025 (from 26.2 billion m³ in 2005 to forty-five billion m³ in 2025). The shortage in the supply of gas, which will be created in that period, will be increased by as much as 96%. The highest average growth rates of gas demand will be achieved by those countries that are currently small consumers of gas in the region, and thus insufficiently gasified – Albania and Bosnia and Herzegovina. On the other hand, Bulgaria, Croatia and Serbia, including Kosovo, will note the lack of sufficient gas supply. The construction of the Turkish Stream gas pipeline on Russia’s initiative is perhaps the most important project that would ensure the strengthening of the geopolitical position of the Balkan countries. This initiative, therefore, in addition to economic and energy reasons, also has the strengthening of the position of the Balkan countries in international relations. Serbia is one of the most important parts of this project in the process of its implementation from the Bulgarian to the Hungarian border.

Energy crises and wars are not behind us. They persist and directly affect energy and national security by reducing energy efficiency, lower supply, rising prices and deep geopolitical tensions. There are no winners in energy crises and wars – all are losers.

The main risks to the energy security of the Balkan countries are related to the instability of energy costs, mainly due to the dependence of countries on oil and gas imports, which is further encouraged by high prices, which they pay due to lack of supply diversification. Another important factor is the critically high level of energy intensity of their economies, mainly due to outdated infrastructure base and limited investment in modernization, including the energy sector itself. However, the basis of all these challenges is poor governance of the energy sector, which increases the possibility of risky consequences, especially during crises. Therefore, in addition to the promotion of energy saving and rational use, as national values ​​and principles, it is necessary to provide adequate oil and natural gas reserves, diversify the routes and sources of supply of these energy sources and start building new electricity generation capacities that will use much higher energy efficiency. conventional fuels and valorize the potential of renewable energy sources. Along with ensuring an open and connected domestic energy market with regional and European markets, and with efficient energy transit and cross-border cooperation, these activities should ensure the development of the energy sector and long-term energy security of countries. Sufficient and adequate energy supply, ie secure, reliable and quality energy supply is a prerequisite for economic and social development.


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