October 31 (SeeNews) - Croatia and Bosnia's Serb Republic signed on Tuesday a cooperation agreement, under which Bosnia's Brod oil refinery will be connected to Croatia's gas transport system, the Croatian energy ministry said.
The agreement aims to improve the air quality in Croatia's eastern municipality of Slavonski Brod and reduce health risks, the energy ministry said in a statement.
The oil refinery is located in Bosnia's Brod municipality, on the border with Croatia, and has been at the centre of a dispute between the two countries due to cross-border air pollution. Its gasification is now being seen as the only way to improve air quality and protect the health of residents in the area.
Croatia's government earlier said that the Brod refinery will be supplied with natural gas by Croatia's privately-held gas trader Crodux Plin via the direct connection of Brod to the Croatian gas system in Slobodnica. The government noted that Brod's connection to Bosnia's gas transport system is impossible, hence the only solution is to bring gas from Croatia by transforming the current product pipeline Slobodnica - Brod into a gas pipeline.
Bosnian gas monopoly BH Gas has, however, opposed the link to Croatia, claiming that such interstate connections cannot be built without an intergovernmental agreement regulating the matter. BH Gas has asked all government representatives to oppose the implementation of this 'partial solution', particularly because it includes the use of a strategic gas point for Bosnia.
The oil refinery is located in the Serb Republic, one of two entities that make up Bosnia. Russia's Zarubezhneft, via its subsidiary NeftegazInCor, owns 80% of Brod refinery, along with 75.65% of refinery Modrica and 80% of fuel retailer Nestro Petrol.