Serbia exclusive: The intentions of GAZPROM to build gas fired CHP power plants may change electricity balances of the country

27. October 2014. / News Serbia Energy

The construction of South Stream brings many benefits for Serbia, and one of them is that it will enable Serbia, when the pipeline passes through our territory, to build gas power plants for generation of electricity, which is increasingly being imported, and also because of the growing demands for green kilowatts and fulfillment of obligations related to the reduction of air pollution. Immense amount of gas will be transported through Serbia via South Stream to Middle and South Europe, which will bring great benefit to Serbia in the form of collection of transit fees as well.

The announced construction of several gas power plants is of great significance for state’s energy stability. The capacity of these power plants would be 3×300 MW. The construction of these facilities significantly contributes to the improvement of capacities and certainty of electricity production, especially in the situation when there is a rapid need for compensating the difference between current demand and available electricity in the system.

Oil industry of Serbia (NIS) and „Gazprom energoholding“ signed in September 2013 The Memorandum on the construction of steam-gas power plant in Pančevo. It was envisaged that ‘’Gazprom energoholding’’ group takes 51%, and NIS 49% of the stake in the share capital of the new company that will build TPP. ‘’Gazprom energoholding’’ is a subsidiary of ‘’Gazprom’’, and it is the biggest owner of electrical energy assets in Russia. The majority owner of NIS is Russian company „Gazprom Neft“.

Electricity and heat energy generated in gas power plant will primarily supply electricity to NIS’ refinery in Pančevo and petrochemical combine HIP ”Petrohemija”, in which NIS is the strategic partner. It is planned for the residual amount of electricity to be delivered to Serbia’s energy market, which will soon be completely liberated.

The construction of steam-gas power plant would be economically and ecologically most efficient solution. This technology provides high efficiency coefficient and low fuel consumption. This will allow reduction of electricity procurement costs for NIS’ refinery and for petrochemical combine HIP ‘‘Petrohemija’’. The fuel for power plant will be natural gas – the ecologically cleanest energy resource. The construction of gas power plant makes sense only if the agreement on the price of the gas that is used for electricity generation is reached. The experts also highlight that the construction will be profitable provided that gas power plants are built with modern, efficient blocks, and that gas price is not more than USD 330-350 for 1000 cubic meters. The gas price should be lower after completion of the South Stream. It is undisputable that „Gazprom“ has the monopoly over Russian gas’ exports, and Russian gas’ prices vary from one country to another.

The South Stream pipeline will bring great benefit to Serbia, as well the USD 1, 7 billion worth of investments, the experts assess. The benefit for Serbia is enormous and that pipeline liberates us from energy dependence, making us the part of the map of European pipelines.

The natural gas is the energy source with distinct technical and ecological advantages compared to other conventional fuels, and in that sense it should significantly contribute to more efficient and ecologically acceptable use of energy. However, natural gas is dominantly imported energy source, and its price so far is related to oil price changes in the world market.

Domestic production of natural gas at the moment satisfies around 20% of domestic consumption with the expected downward trend, and in balance reserves there is a significant presence of low caloric gases (with increased content of SO2, nitrogen etc.), which are not suitable for direct connection to gas system. The completion of the South Stream is of great importance for the gas sector of the Republic of Serbia. This transnational gas pipeline should enable secure gas supply of Europe and entire region in the future.

Gas power plants have the advantage as far as the ecology standards are concerned. The gas at the consumption point burns up to 98%, almost without any discharge of harmful ingredients. The Chapter 27, which pertains to the environment, is one of the most serious and most difficult subjects within negotiations with the European Union.

Construction of gas power plants in Serbia would certainly be of great significance, but such investments shouldn’t suppress the importance of investing in thermal power plants, because Serbia has significant coal reserves, and those reserves can provide secure electricity supply. The total power of 8 thermal power plants with 25 operating blocks is 5.171. MW. They use lignite as a fuel. The new additional 900 MW generated from gas power plants will definitively increase electricity production, but Serbia should primarily use its disposing potentials, which significant coal reserves certainly are.

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