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A long-Term Contract was Signed for Gas Supplies to Serbia

Source: 3/27/2013, Location: Asia

Led by Alexey Miller, Chairman of the Gazprom Management Committee the Company's delegation paid a visit to the Republic of Serbia. As part of the visit, working meetings took place with Tomislav Nikolic, President of the Republic of Serbia and Ivica Dacic, Serbian Prime Minister.

The parties addressed the status of the Russian-Serbian cooperation in the energy sector, paying special attention to the progress with the South Stream project execution. In particular, it was mentioned that on February 21 the Serbian Parliament awarded a special status to the gas pipeline. The adopted bill will help facilitate the procedures required for successful execution of the project, including land allocation for the gas pipeline construction.

In the presence of Ivica Dacic, Serbian Prime Minister a long-term contract was signed for Russian gas supplies to Serbia in the amount of up to 1.5 billion cubic meters of gas annually for a period of 10 years. Gas will be conveyed via the existing route and in the future – via the South Stream gas pipeline.

As part of the visit, a meeting took place with Aleksandar Vucic, First Deputy Prime Minister and Minister of Defense of the Republic of Serbia. The meeting participants considered the current state and prospects for the joint projects. It was noted that mutual development of the Serbian oil and gas infrastructure not only enhanced the country's energy security, but also increased the general level of economic development in the Republic.

Alexey Miller also visited the first European filling station under Gazprom brand in Belgrade and the upgraded Pancevo oil refinery.

In addition, Alexey Miller held a meeting dedicated to NIS activities. Special attention was paid to the current status and development plans of the company's processing and power facilities.

“Today Gazprom and Serbia confirmed the strategic nature of the bilateral cooperation in the oil and gas sector. A long-term contract was signed, Serbia received the guarantees of gas supplies at a good price. Successful execution of joint projects in oil production and processing as well as underground gas storage strengthens our partner relations. The South Stream project – the largest European infrastructure project for today – will include Serbian companies and fully cover Serbia's future demands for energy resources. We are looking into new power generation projects, which may become the next step in our strategic partnership,” said Alexey Miller.

In 2012 Gazprom supplied Serbia with 1.5 billion cubic meters of natural gas. Srbijagas is a state-owned company dealing with natural gas transmission, distribution and storage in Serbia.

With a view to diversify the natural gas export routes Gazprom is implementing the project for the construction of a gas pipeline running under the Black Sea to the countries of Southern and Central Europe – the South Stream project. Intergovernmental agreements were signed with Bulgaria, Serbia, Hungary, Greece, Slovenia and Croatia in order to implement the onshore gas pipeline section.

In November 2009 the South Stream Serbia AG joint project company was registered. Gazprom holds a 51 per cent stake in the company and Srbijagas – a 49 per cent stake.

The Banatski Dvor UGS facility was ceremonially put onstream on November 21, 2011. The UGS facility is one of the largest gas storages in Southeastern Europe. Its working gas capacity makes up 450 million cubic meters, maximum deliverability – 5 million cubic meters per day.

In October 2012 the final investment decision was approved for the South Stream project in Serbia.

In February 2013 the Skupstina of the Republic of Serbia adopted a Bill on Determining Public Interest and Special Expropriation Procedures and Acquisition of Documentation for South Stream Construction.

In January 2008 Gazprom Neft signed an agreement on the terms and conditions for the acquisition of a controlling stake (51 per cent) in state-owned Naftna Industrija Srbije (present NIS – Gazprom Neft).

NIS is one of the largest vertically integrated energy companies in Central Europe. It deals with oil refining, petroleum products marketing and hydrocarbons production in Serbia and Angola, development of projects in petrochemistry as well as traditional and alternative energies. The company annually produces some 1.7 million tons of oil. It owns oil refineries in the towns of Pancevo and Novi Sad with the total capacity of 7.3 million tons per year. NIS also has its own distribution network (about 300 filling stations and oil tank farms). Producing around 85 per cent of all domestically consumed petroleum products, the company is the leading petroleum products supplier in the Serbian market.

From 2009 till now the total volume of Gazprom Neft investments into NIS development has reached some EUR 2 billion.

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