Gas

Implementation indicators

  • Unbundling

    Unbundling

    The daughter company of Srbijagas, Transportgas Srbija, is not yet unbundled and certified. Yugorosgaz Transport’s certification was revoked and its unbundling is still pending. Gastrans, a project company for TurkStream II in Serbia, was exempted and certified by the regulator against the Secretariat’s Opinion. None of the three transmission system operators have been unbundled in line with the Third Energy Package.

  • Access to the system

    Access to the system

    Energy Community gas Network Codes are not transposed. No transparent and non-discriminatory capacity allocation has been performed. Although an entry-exit transmission tariff methodology is in place, Srbijagas hoards its capacities at the only interconnection point (Horgos, Hungary). Gastrans was exempted from third party access without sufficient safeguards for competition.

  • Wholesale market

    Wholesale market

    A virtual trading point exists in theory but is not operational. The wholesale market is monopolized by Gazprom and Srbijagas. No liquidity measures were adopted.

  • Retail market

    Retail market

    The vast majority of the market is supplied at non-regulated prices. All customers are eligible, yet the retail market is dominated by Srbijagas. Customer protection measures are implemented.

  • Interconnectivity

    Interconnectivity

     Interconnection agreements with the adjacent transmission system operators are aligned with the Network Code on Interoperability. Security of gas supply by-laws define protected customers, supply standards and emergency measures.

State of compliance

Serbia’s implementation record in this reporting period has not improved. Serbia transposed the majority of the Gas Directive and the Gas Regulation provisions in 2014 through an energy law. The implementation of the acquis, however, remains at low levels and is tainted with several breaches of the fundamental principles of the Third Energy Package, such as the lack of third party access. Moreover, the vertically integrated undertaking Srbijagas continues to be engaged in both supply and transmission activities and none of the three transmission operators have been unbundled in line with the Third Energy Package.

The majority of transmission system operation tasks were transferred from Srbijagas to its subsidiary Transportgas Srbija Ltd. in 2019. Nevertheless, its request for certification under the Third Energy Package was rightly rejected already twice by the national regulatory authority, AERS.

Unbundling of the transmission system operator Yugorosgaz Transport, a daughter company of Yugorosgaz whose shareholders are Gazprom and Srbijagas, has also not been achieved. The company continues to trade and supply gas in Serbia and imports gas. Although the certification of Yugorosgaz Transport was revoked in 2019, it continues to perform transmission system operation. AERS approved a ten-year network development plan (TYNDP) of Yugorosgaz Transport in August 2020.

Gastrans, a project company owned by Gazprom and Srbijagas, was certified as an independent transmission operator in February 2020, under an exemption decision granted by AERS. This certification, however, did not take into account the Secretariat’s Opinion issued in December 2019. Both the certification and the exemption decision are not compliant with the Gas Directive.

As all distribution system operators serve less than 100.000 final customers, they are exempted from the unbundling requirements by law.

Srbijagas continues to dominate the wholesale and retail markets. It acts as a supplier of all public suppliers in Serbia and as a supplier of last resort, appointed by the Government on a yearly basis.

Srbijagas adopted a grid code, which transposed the basic principles of capacity allocation, congestion management and balancing rules in 2013. However, the code’s capacity allocation provisions are not applied at the only upstream interconnection point Horgos, which is reserved for itself, Gazprom Export and suppliers for Bosnia and Herzegovina. Srbijagas thus effectively prevents new entrants to the Serbian market. Gastrans’ rules on the transmission network were adopted and approved by AERS in May 2020.

The gas Network Codes have not been transposed in Serbia. Thus, no capacity allocation is performed in line with the acquis. Regulated entry exit tariffs continue to apply. REMIT has not been transposed.

The wholesale market consists of bilateral contracts between traders and suppliers. No gas hub exists in Serbia. The majority of gas is sold to non-household customers under unregulated prices (84% of the market in 2019). In retail gas supply, Srbijagas is the dominant market player, accounting for some 81% of total natural gas sales in 2019.

Serbia has well established security of supply secondary legislation. The interconnection agreements with adjacent transmission system operators have been updated in line with the Network Code on Interoperability. The Agreements introduced an Operational Balancing Account (OBA) on the Hungarian-Serbian and the Serbian-Bosnian interconnection, upon the Secretariat’s mediation.

In conclusion, the Serbian gas market, the second largest among Contracting Parties, remains entirely foreclosed based on breaches of European rules. Serbia must rectify its long-lasting breaches of the Energy Community gas acquis. Without an open gas market, Serbia will not be able to deliver decarbonisation of its energy cost-efficiently.