Serbia’s energy sector has been one of the key areas of focus for the government in recent years, with a significant push towards expanding the production of oil and gas as well as developing the renewable energy sector.
Serbian oil and gas economy
Serbia has been producing oil and gas since the early 20th century, with the first oil well being drilled in 1921. The country’s oil and gas reserves are relatively small, and its production levels have been declining over the past few decades. According to the Serbian Ministry of Mining and Energy, the country’s crude oil production in 2021 was around 1.4 million barrels, a decrease of 5.4% compared to the previous year. Similarly, natural gas production was around 70 million cubic metres, down by 5.5% compared to the previous year.
Despite these declines, there are still opportunities for investors in Serbia’s oil and gas sector. The government has been working to increase exploration activities in order to discover new reserves and improve production levels. In 2020, a new exploration and production concession was granted to the Hungarian oil and gas company, MOL Group, for an area in the northern part of the country. This concession is expected to lead to the discovery of new reserves and the development of new projects in the coming years.
Key projects in the Serbian oil and gas industry
One of the most important projects currently underway in Serbia’s oil and gas sector is the construction of the NIS Gazprom Neft Pancevo Oil Refinery. This project is a joint venture between Russia’s Gazprom Neft and Serbia’s NIS, and is expected to be completed by 2024. The refinery will have a processing capacity of 3.8 million tons per year, making it one of the largest in the region. This project is expected to significantly increase Serbia’s refining capacity and improve the country’s energy security.
Another key project in Serbia’s oil and gas sector is the development of the Banat Gas Field. This field is located in the northern part of the country and has estimated reserves of 20 billion cubic metres of gas. The project is a joint venture between Serbian oil company Naftna Industrija Srbije (NIS) and Gazprom, and is expected to involve an investment of around €100 million. The development of this field is expected to significantly increase Serbia’s natural gas production levels and improve the country’s energy independence.
Moreover, the Vojvodina Oil and Gas Exploration Project, which is operated by the Canadian company Vermilion Energy, is expected to further boost the sector. The project covers an area of around 1,500 square kilometres in the Vojvodina region and is expected to produce around 1,800 barrels of oil per day. Vermilion Energy has invested around €30 million in the project to date, and is planning to invest a further €50 million over the next few years.
Renewable energy sector overview
Serbia has significant potential for the development of renewable energy sources, particularly solar and wind power. The country’s solar potential is estimated at around 1,000 kWh/m2 per year, while its wind potential is estimated at around 2,000 kWh/m2 per year. Despite this potential, the renewable energy sector in Serbia is still in the early stages of development. According to the International Renewable Energy Agency (IRENA), Serbia’s total renewable energy capacity in 2021 was around 1,000MW, with hydropower accounting for the majority of this capacity.
Opportunities for investors in the renewable energy sector
The Serbian government has recognized the importance of developing the renewable energy sector and has implemented a number of measures to encourage investment in this area. One of the key measures is the introduction of a feed-in tariff system, which provides financial incentives for renewable energy producers. The feed-in tariff system is set to run until 2030 and provides a guaranteed price for renewable energy that is sold to the grid. This has encouraged the development of several large-scale renewable energy projects in Serbia, including wind farms and solar parks.
Solar and wind energy projects in Serbia
Serbia also has significant potential for the development of solar energy, with an average of around 2,100 to 2,500 hours of sunshine per year.
One of the largest solar projects in Serbia is the Krnovo Solar Park, which has a capacity of 100MW and is located in the Mačva region. The project is being developed by a consortium of companies, including EFT Group and China National Complete Engineering Corporation (CCEC), and is expected to generate around 150GWh of electricity per year. The Krnovo Solar Park has received financing from the EBRD and the Green Climate Fund.
Serbia has significant potential for the development of wind energy, with average wind speeds of around 5 to 6 metres per second in the northern regions of the country.
Serbia’s solar and wind energy potential is vast, and the government has been working to increase investment in this sector. One of the largest wind projects in the country is the Kovačica Wind Farm, which has a capacity of 104MW and is expected to generate around 300GWh of electricity per year. The project was developed by Israel’s Enlight Renewable Energy and is located in the Vojvodina region. The Kovačica Wind Farm received financing from the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC).
A large-scale wind project in Serbia is the Čibuk 1 Wind Farm, which has a capacity of 158MW and is expected to generate around 483GWh of electricity per year. The project was developed by Tesla Wind and is located in the Banat region. The Čibuk 1 Wind Farm received financing from the EBRD and the Green Climate Fund.
Another large project in the country is the Kostolac Wind Farm, which has a capacity of 69MW and is expected to generate around 180GWh of electricity per year. The project was developed by Serbia’s state-owned power company, EPS, and is located in the east of the country. The Kostolac Wind Farm received financing from the EBRD and the European Investment Bank (EIB).
The Alibunar Wind Farm, which has a capacity of 42MW and is expected to generate around 120GWh of electricity per year. The project was developed by Elicio NV, a Belgian renewable energy company, and is located in the Banat region. The Alibunar Wind Farm received financing from the EBRD.
Hydrogen energy in Serbia
Serbia is also exploring the potential of hydrogen energy, which could provide a new source of clean energy for the country. In 2020, the Serbian Ministry of Mining and Energy signed a Memorandum of Understanding (MoU) with the Japanese company, Mitsubishi Corporation, to explore the development of a hydrogen economy in Serbia. The project is expected to involve the production, storage, and transportation of hydrogen using renewable energy sources.
The Serbian government has initiated a project called “Green Hydrogen” to explore the potential of hydrogen energy in Serbia. The project aims to develop a roadmap for the production, storage, and distribution of green hydrogen in the country, with a focus on using renewable energy sources such as solar and wind.
The project is being implemented by the Serbian Ministry of Mining and Energy in collaboration with the German development agency, GIZ. The development of a hydrogen economy in Serbia could create new opportunities for investors in the energy sector and help the country to transition to a more sustainable and decarbonized energy system.
Displaying Serbia’s potential
In March 2023, IN-VR hosted the eighth version of the Balkans Energy Summit in Athens, where the aforementioned topics were discussed; the event had a special focus on hydrocarbons exploration, securing investments, clean project development, and overcoming energy poverty. Furthermore, participants had the chance to display the country’s role in the Balkans region, and the steps needed in order to become one of Europe’s strategic powerhouses and important transportation corridors. This event will be hosted once again in 2024.