Despite tensions between Ukraine and Russia: Gas shortage in BiH will no longer be an issue

Following announcements that Russia would cut off gas supply to Ukraine due to excessive debts, concerns arose in BiH, as we are facing another winter for which record low temperatures are usually predicted, writes the BiH news agency Patria. 

Citizens of Sarajevo well remember the Russian cutoff of gas supply to Ukraine in January 2009. At that time, the capital city was left without energy overnight, leading to a panic search for any electric heaters.

Fortunately, such a catastrophe cannot be repeated. Namely, when Europe experienced serious energy shocks that January 2009, when citizens and industry, which relies 80 percent on gas, were endangered, it was known that an alternative solution would be found.

Nord Stream as a solution

In just 21 months, a new gas pipeline route was built. This is the alternative Nord Stream route, which connected Russia and Germany via the Baltic Sea. The project cost 7.4 billion euros. It was built by Gazprom with powerful private European companies, Germany's Wintershall and E.ON, Dutch Gasunie, and French GDF Suez.

These companies are also giant gas distributors, so it is very possible that in case of a shortage, BH Gas will buy the necessary quantities of energy from them. Although complicated, it is possible to supply Hungary and then Serbia and BiH via Nord Stream. The fact is that BiH has a twenty-year contract with Gazprom, valid from 1998 to 2018. Bosnia and Herzegovina is a small consumer, so it relies on global gas consumers and does not pose any problem for normal supply.

There have been previous discussions about possible natural gas storage in Bosnia and Herzegovina. Namely, Serbia has built its own gas storage, and so has Croatia. Bosnia and Herzegovina has not done so. An unnamed source from Patria at BH Gas admits that it is an expensive investment, mainly because there are fewer and fewer natural gas consumers in BiH and consumption is decreasing due to several consecutive mild winters in our country.

BiH will not have its own storage

At the regular consultation on gas supply, held in Vienna in August this year, regarding the proposal for the construction of a new gas storage facility in BiH and the region, it was stated that there are too many gas storage facilities in Europe. The Trans Adriatic Pipeline (TAP project) was discussed, which would solve the supply of Europe and the Western Balkans with natural gas. The European Investment Bank offered Balkan countries a loan of 7 billion euros for a definitive solution to gas supply.    

The gas storage facility that Serbia has could have been used for BiH's reserves. Namely, the financing of that storage facility was helped by Russian Gazprom. They, according to our source, offered similar financial participation to BiH, but we refused precisely because of the enormously reduced gas consumption. The possibility of storing BiH's gas needs in Serbia remains. This type of storage would mean paying a portion in advance and would bring numerous benefits to consumers in BiH, primarily a lower price and a secure gas supply, especially during the critical winter season.

Everything, as before, remains at the level of open possibilities. 

The only unfavorable news is that prices for gas purchased on the free market in such a scenario could be higher. This price could halve the reduction in natural gas prices that we recently received from our distributors, writes Patria.