June 21, 2024
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Serbia: Gas games, MVM Hungary and Srbijagas

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Since the Hungarian company’s offer to EPS to establish a joint venture, in which the Serbian side would include 11 hydroelectric power plants, had previously failed, MVM has now entered into a contract with another public company, Srbijagas. The details, at least for now, are being kept under wraps. Except that in this case too, Srbijagas will be a minority partner, as it is in Banatski Dvor.


The company Serbhungas, a joint venture between the Hungarian company MVM and the Serbian public company Srbijagas, will be registered in Novi Sad, and in the ownership structure, MVM will have a 51 percent share, and Srbijagas 49 percent. This was confirmed to NIN by the Ministry of Mining and Energy, with the addition that decisions will be made jointly, and that the founding contribution will be 200,000 euros, in proportion to the share owned by the two parties. The relevant ministry also says that the new company will have the form of a limited liability company, as well as that it is being established with the aim of “improving supply and achieving better prices for our citizens and the economy”.

Neither Srbijagas, nor the competent ministry, however, explain to the public the details of the signed contract, which was served in the wake of major personnel changes in another key energy company, Elektroprivreda Srbije. And although the aforementioned ministry replied that the future joint venture, the establishment of which is planned these days, or rather by the end of June, will deal with gas trade in Serbia and the region, it is not specified what the detailed plan is.

The public, on the other hand, rightly disturbs the concealment of the contract, especially bearing in mind the fact that this was preceded by the offer of the same Hungarian company MVM to establish a joint venture with EPS that should build some new energy capacities, with the fact that in its founding capital, the Hungarian side invested money, and EPS would contribute 11 of its hydropower plants. Since the recently replaced Supervisory Board of EPS, and at the suggestion of the management, rejected such an offer, not long after, the contract with MVM was signed by Srbijagas, the second most important state energy system. The Government of Serbia gave consent for the establishment of a joint venture, and the contract was signed at the Strategic Council for Cooperation between the two countries, based on the previous decision of the Supervisory Board of Srbijagas, adopted in April this year.

When asked by NIN what benefits Srbijagas and our country will get from the establishment of this company, the Ministry of Mining and Energy replied that “the company should first fulfill the basic requirements, such as the formation of the management body and the adoption of the business plan, which will be followed by the implementation plans and business goals, and future profit depends on it”.

Miloš Zdravković, an energy expert, tells NIN that MVM is the most important Hungarian energy company, similar to our EPS, but apart from electricity, it also deals with natural gas, and that in this sense their credibility as a strategic partner is not disputed.

“Neither the company nor Hungary’s energy policy is in dispute. I believe that the country has a very good energy policy and protects its interests in the best possible way, because not only does it not sell any of its capacities, but it also nationalized what was previously sold. In this sense, I would like to be able to praise the recently signed joint venture agreement with such a company, but I can’t, because information about the deal is being fed to us on a spoon and we can’t know what is behind it. It is possible that there is a good deal in between, but we don’t know that in advance. I do not doubt the plans and goals of the Hungarian MVM to protect its interests, but have we protected ours? If it turns out that the deal is similar to the offer they made to EPS, then it’s not good for us,” says Zdravković.

For now, the authorities, apart from the information that they will be engaged in gas trade, reveal almost nothing, so it is not explicitly claimed that the future company will jointly build an underground gas storage, which will then be traded on this and surrounding markets. As a reminder, during the agreement with Russia on the sale of NIS, Serbia established a joint venture with Gazprom on gas storage, Banatski Dvor Underground Storage, in which Russian Gazprom Export has a majority share of 51 percent. And that, among others, is one of the reasons why, even after more than a decade, the capacities of that gas storage facility have not been expanded, although such an intention existed from the very beginning. Srbijagas does not answer why it is now entering into a similar business, with practically the same ownership structure, as well as the question why this company did not build an underground gas storage facility, which Serbia more than needs.

According to some earlier announcements, which are now confirmed by the former Minister of Energy Zorana Mihajlović, the responsibility for the fact that Banatski Dvor still has the same capacities, as well as for the fact that a new Itebej gas storage facility has not been built, lies with Srbijagas, which all these years has shown no interest in realisation.

The result of such decisions is the renting of gas storage facilities in Hungary during the last gas crisis, which our country, dependent on the import of this energy source and without sufficient storage capacity, met completely unprepared.

“There are many questions there. Why not take a favorable loan and build the Itebej underground gas storage facility that has been announced for years? That would certainly be justified borrowing. In this way, we expand the storage capacities, and we also ensure energy security so that we do not have a repeat of the situation from the last crisis, when we were forced to import overpriced gas. Also, if a gas storage facility is built with the Hungarians, where will it be, because gas storage cannot be built in every place, it is built on dried up gas fields. It is not clear why Srbijagas and EPS, for example, are not working on developing gas power plants, because it is green energy and fits into the green energy plan. These are all unanswered questions, and that is why the public has doubts as to whether such actions are taken out of ignorance or whether someone’s interests and corruption are involved. It’s easiest to say that gas will be traded, you don’t need any advanced knowledge for that, you buy gas when it’s cheaper and sell it when it’s more expensive, and in the meantime you store it. But why do we need a foreign partner for that, if it is profitable and necessary, then we can do it ourselves. When the state has the means to cover the losses of Srbijagas, then it can also guarantee the loan that this company would take to build a new underground storage facility,” says Zdravković.

What the new company will do in the end, will be seen when it is formally established, and since, in the meantime, the management of EPS has also changed, the possibility of putting on the agenda again the offer to establish a joint company of MVM with EPS and the allocation of 11 Drina-Lim hydropower plants to that joint enterprise. What is already known is that Serbia and Hungary have agreed on the construction of an oil pipeline from Aldje in Hungary to Novi Sad, more than 100 kilometers long, which should be built by our public company Transnafta and the Hungarian Mol. The plan is to form a new joint venture for the modernization of the electricity grid, and the construction of the Reske – Horgoš border crossing on the highway connecting the two countries has also been agreed.

As Peter Szijarto, Minister of Foreign Affairs and Trade of Hungary, said, “the energy security of Hungary today is unthinkable without Serbia”. Is the reverse also true, because the representatives of the Serbian authorities did not say it out loud?


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