Serbia has completed the public procurement procedure for construction of its section of the oil pipeline between Serbia and Hungary. The 113-kilometre underground pipeline will connect Horgoš with Transnafta’s terminal in Novi Sad and have an annual capacity of 5.5 million tonnes.
Key Overview
- Serbia has completed procurement for technical supervision of the oil pipeline project.
- The winning supervision bid is worth around 460 million dinars (€3.9 million) excluding VAT.
- Construction works are valued at 17.4 billion dinars (€148.2 million).
- The Serbian section will stretch 113 kilometres from Horgoš to Novi Sad.
- The pipeline will have an annual capacity of 5.5 million tonnes.
- The route will pass through Kanjiža, Senta, Ada, Bečej, Žabalj and Novi Sad.
- Serbia will be able to receive crude oil from Hungary through the Druzhba pipeline, in addition to supplies from Croatia through the JANAF pipeline.
Serbia Completes Oil Pipeline Procurement
The public procurement procedure for the construction of the Serbian section of the oil pipeline between Serbia and Hungary, running from Novi Sad to Horgoš, has been completed.
Serbia’s state-owned oil pipeline operator Transnafta has officially awarded the contract for technical supervision of the project after the procurement process was reassessed following a challenge from another bidder.
A consortium led by SGS Belgrade and comprising Project Biro Utiber, SGS Belgrade, Petrol Projekt, SGS Czech Republic and Preventiva 012 was initially selected for the supervision role in May.
However, a consortium led by Bureau Veritas challenged the decision. The Public Procurement Commission upheld the complaint, requiring Transnafta to reassess the bids.
On 6 August, Transnafta confirmed the original winning consortium.
The estimated value of the technical supervision works was approximately 600 million dinars (5.1 million euros) excluding VAT. The winning bid was worth around 460 million dinars (3.9 million euros).
€148 Million Pipeline Construction Project
The construction works for the Serbian section of the pipeline are valued at approximately 17.4 billion dinars (148.2 million euros).
A consortium will carry out the construction, with MVM Južna Bačka holding the largest share, with a 43 per cent stake.
The new pipeline is intended to expand Serbia’s crude oil supply routes by enabling the country to receive crude oil from Hungary via the Druzhba pipeline.
This would provide an additional supply route alongside Serbia’s current crude oil supplies from Croatia through the JANAF pipeline.
113-Kilometre Underground Route
The Serbian section will stretch 113 kilometres, beginning near Horgoš and extending to Transnafta’s terminal in Novi Sad.
The entire route will run underground and will have an annual transport capacity of 5.5 million tonnes.
The pipeline will cross several municipalities and areas, including Kanjiža, Senta, Ada, Bečej and Žabalj, as well as the city of Novi Sad.
The project is therefore designed to establish a direct connection between the Serbian and Hungarian oil pipeline networks while providing Serbia with an additional route for crude oil supplies.
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State-Backed Financing
The Serbian government has also taken steps to support financing for the investment.
In August, the government adopted a draft law providing a state guarantee for a 14.53 billion dinar (123.8 million euro) loan to Transnafta.
The loan would be used to finance the investment in the oil pipeline.
The state guarantee forms part of the financing arrangements for the project, while the construction contract and technical supervision procurement have now been formally awarded.
Outlook
The completion of the procurement procedure marks another important step toward the construction of the Serbian section of the Serbia-Hungary oil pipeline, following the selection of the contractor for the construction works and the formal award of the technical supervision contract.
Once completed, the 113-kilometre underground route will provide Serbia with an additional source of crude oil supplies from Hungary through the Druzhba pipeline, alongside its existing supplies from Croatia through the JANAF pipeline. With an annual capacity of 5.5 million tonnes, the pipeline is expected to strengthen Serbia’s access to crude oil and expand its available supply routes. Financing for the investment is also being supported by the Serbian government’s proposed state guarantee for a €123.8 million loan to Transnafta.
FAQs
1. How long will the Serbian section of the oil pipeline be?
The Serbian section will be 113 kilometres long, running from near Horgoš to Transnafta’s terminal in Novi Sad.
2. What will the pipeline’s annual capacity be?
The pipeline will have an annual capacity of 5.5 million tonnes.
3. How much will construction of the pipeline cost?
The construction works are valued at approximately 17.4 billion dinars (€148.2 million).
4. How will the project be financed?
The Serbian government adopted a draft law providing a state guarantee for a 14.53 billion dinar (€123.8 million) loan to Transnafta to finance the investment.
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