Clarion Partners - Owner's Engineer

Sector Review: Energy in Serbia 2010

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The three key pillars for the further development of the energy sector in Serbia are restructuring and modernization of NIS, simultaneously with market liberalization, realization of announced investments in the gas industry and investments in electricity production.

Last year was very significant for the energy sector, considering high price increases of some energy substances and its consequences, as well as the impact of the financial crisis on the entire sector. Last year will be remembered in Serbia for the launching of privatization in the sector (oil sector) and the beginning of the realization of announced projects (strategic partnership between Serbia and Russia) in the gas industry.

High increase in the price of energy substances, particularly oil (crude oil reached a historical high in the middle of the year) and gas, threatened to jeopardize the entire world economy, especially through inflation (an increase in production costs). However, a period of heavy fall in prices began in the middle of the year. As a result of the global economic crisis, prices returned to the 2004 level by the end of the year, influenced by falling demand.

The agreement between Serbia and the Russian Federation on cooperation in the oil and gas sector resulted in the first ever launch of the privatization process for large energy systems in Serbia. A majority share (51%) of national petroleum company NIS, the biggest enterprise in Serbia in terms of operating revenue, was sold to Russian energy giant Gasprom for

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