Macedonian Economy Is Slowly Shifting to Gas
A record 420 million normal cubic meters of gas were consumed last year. By 2024, capacities for access to 5.5 billion cubic meters of gas with the interconnection with Greece should be provided in North Macedonia. The country should become a gas hub where Kosovo and southern Serbia will draw gas from
Author: Goran Lefkov
North Macedonia leaves the complete dependence on Russian gas in two years. The first quantities of Russian gas in North Macedonia arrived in the second half of the ’90s. The capacity of the gas pipe is 800 million cubic meters of gas, at a pressure of 40 bar. If the Kyustendil compressor station is changed to 54 bar, we can get a maximum capacity of 1.2 billion cubic meters of gas.
But this capacity has never reached a utilization of over 40 percent. The reasons are political, according to Mirche Adamchevski, a former correspondent of “Nova Makedonija” from Moscow and a great expert on the Russian gas situation.
Russia uses gas and energy as weapons. Being dependent on only one source of gas makes us very vulnerable as an economy, Adamchevski said.
He believes that we must have diversified gas access in order to reap its benefits.
This is also stated in the publications of the European Union. The European Commission, in its study “Energy as a tool of the foreign policy of authoritarian states, in particular Russia,” argues that Russia uses energy resources to protect and promote its interests and expand geopolitical participation in other countries.
For Mitko Andreevski, a former gasification adviser in the government led by former Prime Minister Zoran Zaev, the gas utilization is insufficient.
The country’s paradox is having a virtual gas pipeline in Strumica 10 years ago, where gas is being transported by trucks and there are 400 gas users, while in Skopje which has a gas pipeline from 30 years ago, there is not a single household connected to that pipeline, Andreevski said.
He also believes that the connection only with Russian gas makes the Macedonian economy too vulnerable and unstable.
So far, the use of Russian gas has been very uncertain. If, for example, a businessperson had to decide what technology to invest in, the gas would come last because they would ask themselves: even though gas is the cheapest, what if Putin shuts the valve? My capacity would stand still until the Russians take pity and release gas, Andreevski said.
He believes that these fears will cease to exist post-2024 when the first quantities of gas from the interconnector with Greece should start flowing.
North Macedonia does not need the South Stream (Turkish Stream)
Connecting to the Russian pipeline, formerly known as the South Stream and now the Turkish Stream will increase security risks in the countries of Central and Eastern Europe. This is stated in the publication of the Center for the Study of Democracy from Sofia. They state that the share of Russian gas in Europe has increased from 30 to 35 percent in 10 years.
Those knowledgeable about the gas situation in the country, find it illogical to connect to it.
If we already have a Russian gas pipeline by Gazprom since 1997, which to this day has not been used more than 40 percent, then why is it important for me to connect to yet another pipeline of the same supplier, that one being Gazprom via the Turkish (South) Stream pipeline. Even then, 10 years ago, I claimed that we needed access to gas from the south and diversification of suppliers,” Andreevski said.
Adamchevski nurtures a similar attitude.
In the meantime Russia is building another gas pipeline in the Balkans, the so called South Stream which is going to Serbia via Turkey and Bulgaria. There was supposed to be a leg for Macedonia as well, but I consider that unnecessary. That gas will still be Russian and I see no reason to connect to it when we already have a pipe with Russian gas, which is not used even 30%, Adamchevski said.
He adds that if the country wants to be energy independent, it must connect to the Azerbaijan Pipeline (TAP) and the interconnector in Alexandroupolis, from where we will receive gas from ships. Once we have two sources, Russia will not be able to blackmail us economically for political reasons.
Gas connection with Greece makes the country a regional gas hub
The country should have a connection with Greece through an interconnector in the area of Nea Mesimvria, some 50 km south of Gevgelija and 20 km northwest of Thessaloniki. The gas pipeline should transport 2.8 billion cubic meters of gas (7 times more than the current gas consumption in North Macedonia).
The interconnection will connect to our transmission network in Negotino and is expected to be commissioned in 2024, thus diversifying and stabilizing our sources of natural gas supply. Our participation in the construction of the LNG terminal in Alexandroupolis increases the importance and need for a quick connection with the Republic of Greece, said Bajram Rexhepi, Director of National Energy Resources (NER), a company responsible for the construction of gas pipelines in North Macedonia.
The total value of this connection was initially supposed to cost 54 million euros. However, the investors decided to upgrade the gas pipeline, so that in the future it can be used to also transport hydrogen, in addition to natural gas (methane). Therefore, the price of the pipeline has increased to 58.5 million euros.
Today, by pipeline we mean only a pipe and a system that transports natural gas. In a broad sense, a gas pipeline represents a pipeline for transporting gas, and what type of gas it is, whether it is methane or hydrogen is a completely different matter. This is how we should look into future investments in gas infrastructure, Andreevski said.
According to the European Green Agenda, the European Union should be decarbonized by 2050, Japan by 2035, and the United States by 2040. This means that carbon-containing fossil fuels will be phased out. By chemical composition, natural or ground gas is methane with the chemical formula CH4. Although it is the most environmentally friendly fuel, it still contains carbon, which means that there is some pollution.
So far, the most common ways to produce hydrogen are by reforming natural gas and the second is by electrolysis of water.
The second option for hydrogen production is the one available with us. It is the use of solar panels that will produce electricity that will be used for electrolysis of water (chemical formula H2O), oxygen will be separated and pure hydrogen H2 will remain, Andreevski said.
This means that in the future, North Macedonia can also use this pipeline to export hydrogen if it produces it by electrolysis of water, he added.
Regional gas hub
With the construction of the gas connection between North Macedonia and Greece, the country should become a gas hub in the Balkans from where neighbouring countries should withdraw gas.
“Our plans include connecting with our two northern neighbors, Serbia and Kosovo, as well as Albania and a second interconnector with Bulgaria near Strumica, which provides a very solid basis for creating an integrated and stable regional natural gas market,” Rexhepi said.
He adds that it is planned to have a two-way connection with Serbia in which we could draw gas from them and they could draw from the gas pipeline that we are building. Southern Serbia is not connected via gas pipeline with northern Serbia, and they are so close. Serbia is less than 30 kilometers away from Gama’s current network.
If southern Serbia withdraws 600-700 million cubic meters of gas from us, then it is planned to build another interconnector to Albania and withdraw that gas from there. TAP’s capacities are reserved for the next 15 years. The countries can withdraw up to 10% of those capacities, so if Albania does not use them, it is possible that we do. TAP has a capacity of 20 billion cubic meters of gas per year, according to Truthmeter sources related to the construction of the gas pipeline network in the country.
Gas consumption in the country increases every year. The Annual Report for 2020 by the Energy Regulatory Commission (p. 91) states that 337 million normal cubic meters of gas have been consumed in the country. This year, consumption has increased by more than 20 percent in one year.
2021 is a record year in gas consumption. The reports are not ready yet, but from what I know, 420 million normal cubic meters of gas have been consumed. This is a record consumption since gas was brought to this country, said Marko Beslimovski, President of the Energy Regulatory Commission.
He adds that the reason for the record gas consumption is the merit of TE-TO, but also the fact that the economy was working on a larger scale.
We also had several new connections to the gas network. However, the biggest reason for these quantities is that the companies have secured relatively low gas prices. By December 31, 2021, the average price was about $230 per normal cubic meter of gas. “Makpetrol” and “TE-TO” have secured cheap prices in 2020, Beslimovski highlighted.
North Macedonia, but also the countries in the region are very small gas consumers. This leaves room for increasing gas consumption with the launch of the interconnector with Greece.
Table 1. Gas consumption per citizen
|Country||Consumption per citizen|
|9||North Macedonia||200 (nm³)|
|10||Bosna and Herzegovina||60 (nm³)|