BOSNIA IN THE COLD WITHOUT NATURAL GAS

UNCLAS SARAJEVO 000019 DEPARTMENT FOR EUR/SCE, EUR/EX E.O. 12958: N/A TAGS: ECIN KPAO ENRG PGOV PREL SENV AMGTATK BK SUBJECT: BOSNIA IN THE COLD WITHOUT NATURAL GAS ¶1. Summary: With only a faxed warning from Gazprom shortly before it happened, Bosnia's natural gas supplies were cut off yesterday afternoon, joining much of Europe in the cold. Because there is only one pipeline into Bosnia from Serbia, only about one third of Bosnian households are dependent on natural gas, all of which comes from Gazprom. Nonetheless, the impacts on residential customers in Sarajevo, Zvornik, Visoko and Zenica and a few key industries such as Mittal Steel are significant. Many can turn to alternative fuels for heating for a few days, but, if the cut off persists, hardships will deepen as the winter's coldest days coincided with the Russian action. The temperature this morning in Sarajevo was a chilly 10F. Embassy Sarajevo has formed a task force to monitor te situation and to oversee actions to mitigate the situation for embassy personnel. Maintenance staff worked through the night turning on back-up electric systems for embassy households with children. The chancery and annex buildings are operating on fuel oil systems. End summary. -------------- Not much of a warning and no reserves -------------- ¶2. According to BH Gas General Manager Almir Becarevic, his firm received a series of faxes from Gazprom beginning yesterday morning January 6 warning that the country's gas supply was about to be reduced and finally cut off. Supplies dwindled quickly and by 1530. there was no more gas to be distributed. Bosnia has no natural gas storage capacity and when the pipeline stopped flowing, there were no reserves to fall back on. Fortuitously, because there is only one pipeline into Bosnia, only about a third of the households in the country felt the impact as the bulk of Bosnians still rely on coal, wood or fuel oil for heating. Banja Luka and Mostar, for example, are not affected. (Political disputes have blocked planned expansions of natural gas service - especially into the Republika Srpska (RS).) The pipeline route is from Belgrade via Zvornik to Sarajevo and then to Visoko and Zenica. The main customers are residential users in those cities and several key industrial facilities such as Mittal Steel and an aluminum plant in Zvornik. All of those industrial facilities are now closed. ¶3. On January 6, ECON Counselor and ECON Specialist met with Becarevic who was visibly upset. He showed us the series of �A;faxes leading to the total cut off. The fax from Russia was simply one sentence saying the gas was going to be off. Becarevic said that the Bosnian government has sent letters today to Russia and the Ukraine protesting the situation and that Bosnian Foreign Minister Sven Alkalaj had also protested to the Russian Ambassador. ECONOFF also met with Energoinvest Assistant General Manager Ibriham Bosto. (Energoinvest not BH Gas is Bosnia's lead negotiator with Gazprom.) He too was completely surprised and upset at the Russian cut off. Tomorrow at 1230 Federation Minister Brankovic will hold a second meeting of all concerned officials to discuss possible actions that can be taken to help citizens through the crisis. ¶3. Some 130,000 households in the country depend on natural gas for heating. BH Gas serves as the wholesale supplier in the Federation. Distribution company Sarajevogas serves 70,000 households in Sarajevo. Sarajevogas Eastern Sarajevo serves an additional 3,000 households in Eastern Sarajevo (in the RS). Zvornikstan distributes gas to 2,000 households in Zvornik. In addition, an estimated roughly 80,000 residents (20,000 building connections) in Zenica are connected to a system that provides heat from the operation of the Mittal Steel plant, which is not functioning. (These numbers are all estimates and exact numbers are difficult to determine because of variations in building sizes and household sizes - one connection to a building might serve 20 apartments, etc.) -------------- - Some mitigating circumstances, but it is cold -------------- - ¶4. A large portion (47,000 apartments) of the natural gas households in Sarajevo are served through central heating districts run by a company known as Toplane Sarajevo. When the gas crisis became apparent, Toplane switched its source of fuel in its plants from natural gas to fuel oil. According to press reports, there are, however, only 5 to 10 days of emergency oil reserves on hand and a prolonged natural gas cut off will require more fuel oil supplies. In addition, some 5,180 apartments cannot be served with alternative fuels. Switching to fuel oil also has an environmental impact in the city and will make Sarajevo's already bad winter air worse. (Many Sarajevo homes still burn wood or coal which has very negative impacts on the city's air quality - especially when there are temperature inversions.) For that reason, Sarajevo officials initially rejected the idea of seeking oil from the Brod refinery in the RS because of its high sulfur content. Bosnian officials are seeking additional supplies of fuel oil, but may have to turn to Brod as the only source of sufficient fuel. Croatian-based INA's local manager for example, told ECON Commercial Specialist that they cannot provide extra fuel oil. Zenica Mayor Husain Smajlovic reported to ECON Specialist that Zenica is also exploring the possibility of using fuel oil to operate the natural gas fired Mittal Steel heating system for the residents of the city who depend on it. The Russian timing, however, could not have been worse for Bosnians. The morning temperature in Sarajevo was a chilly 10F and even colder weather is forecast for later in the week. -------------- Concerns about the electric grid -------------- ¶5. Many Sarajevo residents are turning to electricity as an alternate or supplemental source of heat. (There are even press reports of fights breaking out in stores over the remaining few electric space heaters for sale last night.) Elektroprivreda BiH (EP BiH) Executive Director Emir Aganovic told ECON Specialist that he estimates that consumption of electricity is currently up by 20 percent. He is confident that EP BiH has the capacity in its generation system to meet the demand. He is prepared for the worst, however, if the demand begins to overload the distribution grid, and has emergency crews on alert. The area of highest concern is the old city of Sarajevo where the system is very old and unreliable and local black outs could easily occur. -------------- 36 Hours to start it back up -------------- ¶6. Sarajevo is at the end of a pipeline system that starts in Russia and crosses Ukraine and Serbia. It will take, according to energy experts here, roughly 36 hours for the system to reach full pressure in Bosnia once gas begins to flow into the pipeline at the Russian end. Accordingly, even a rapid resolution of the ongoing Russian-Ukrainian dispute that led to this situation will have a lag time of a day and a half here. -------------- Embassy Sarajevo up and running -------------- ¶7. Embassy Sarajevo's chancery buildings are operating on a fuel oil system and have a 30-day supply of fuel oil on hand. USAID's building also operates on fuel oil and has a year's supply. Since the beginning of the crisis yesterday, Embassy facilities maintenance staff have been going to the more than 100 Embassy family houses and apartments to turn on back-up electric heating systems with households with children the first priority. Embassy personnel are monitoring the situation in each U.S. direct hire household and in the broader American community. The Embassy has also formed a task force to plan contingencies should the crisis be prolonged or back-up electrical systems fail. We have also surveyed local staff, some but not all of whom have back-up oil heating. Most though are, thus far, relatively stoic. We will hold a town hall meeting Friday to discuss Embassy community concerns. -------------- Wartime memories -------------- ¶8. Comment: It is too soon to tell the political, economic, environmental and psychological impacts on Bosnia from the natural gas cut off. The shut down of Mittal Steel had other major industrial facilities is certainly an economic loss. The cost to Bosnia will depend on how long the crisis goes on. Sarajevo residents will be especially concerned as many here endured four long winters under siege without heat and have not forgotten their suffering. It is certain, however, that Russia has few friends in Sarajevo today. End comment. ENGLISH