Danube Fuel Shipments Fall to a Quarter of Plan
River fuel imports have fallen to a quarter of plan: barges run at 30 to 40 percent of capacity on the low Danube, while rail and trucks cover the rest at a higher cost to importers.
Only 25 to 30 percent of the planned volume of oil derivatives is now reaching Serbia by river, according to an estimate from Mining and Energy Minister Dubravka Djedovic Handanovic, given to the newspaper Politika. It is the first time the disruption in fuel deliveries has been attached to a number rather than just described.
Asked how much the low Danube water level is affecting the economy, the minister said it has seriously disrupted oil and oil derivative supply chains across the whole region.
“According to our estimates, only 25 to 30 percent of the planned quantities may arrive, which makes the situation very challenging. Despite all the challenges, and there are many, so far we have managed to secure enough fuel and preserve the security of supply,” Djedovic Handanovic said.
July’s numbers confirm the estimate is not overly pessimistic: last month, only about 25 percent of the planned river import of oil derivatives was actually delivered, because of the water level.
Why barges can’t carry a full load
Draft is the only variable that matters. With the river this low, barges can only load to 30 to 40 percent of their total capacity, since a full load would run them aground. Less cargo per trip means more trips are needed for the same volume, and there are no more trips than the river’s flow allows.
Rail and road cover the difference. Transport is organized through rail cars and tanker trucks, which move smaller quantities per run and raise import costs for oil companies, all while pump prices remain capped. The cost, in other words, stays with the importer.
Hydrology offers no quick fix. The Danube’s water level in Serbia has only been lower once, in 1909, when it hit minus 143 centimeters, and a new record low of minus 147 centimeters was forecast for August 3.
How much is missing in August
The balance for this month looks like this:
- estimated demand for oil derivatives stands at about 200,000 tons
- around 39,000 tons of diesel is planned for import, the same as in July
- of that amount, about 20,000 tons was supposed to arrive by river
That river portion is exactly what has been thrown into question, so the gap is being closed from domestic refining and from operational reserves. According to what the ministry has been told by NIS, refining is expected to rise in the second half of the month, once already ordered crude oil deliveries arrive, from the current roughly 9,500 tons of crude per day to about 13,000 tons per day.
The second measure is releasing stockpiles. NIS has made roughly 23,000 tons of its operational reserves available to other oil companies, on top of about 19,000 tons of Euro diesel already released earlier from the company’s operational reserves, which covered July’s demand. The state reserves are not being touched.
“The Danube’s water level is at a record low, and in such extraordinary circumstances the refinery’s operation is decisive, because the poor hydrology will persist and all oil companies in Serbia are supplied primarily from the domestic refinery,” the minister concluded.
What’s being done about the price
Two measures are keeping the pump price in check. The ban on exports of crude oil and oil derivatives, including Euro diesel, has been extended through the end of August, so that all volumes stay on the domestic market. On August 13, the government also extended the temporary 20 percent cut in excise duties, this time until August 23, a decision signed by First Deputy Prime Minister and Finance Minister Sinisa Mali.
The temporary excise amounts now stand at 57.60 dinars per liter for unleaded gasoline, 59.23 dinars for gas oil, and 61.24 dinars for leaded gasoline.
We reported on prices earlier, when diesel at the pump cost 229 dinars and the excise decision then in force was set to expire on August 16. That decision has since been replaced by a new one, but the deadline is again short: seven days. The next two dates on the calendar are the excise decision’s expiry on August 23 and the expiry of NIS’s operating license on August 28.
