Gazprom Signs First Long-Term Gas Sales Contract With Serbia

, News Serbia Energy

Russia’s Gazprom OAO (GAZP) and Serbia’s Srbijagas JP signed a contract on natural-gas sales to the Balkan country through 2021 as Gazprom announced it may invest in gas-fired power plants in Serbia.

The first long-term contract with Serbia brings a 13 percent price cut from previous annual contracts, Alexei Miller, Gazprom’s chief executive officer told reporters in Belgrade today. Deliveries of about 1.5 billion cubic meters of gas a year would grow by 3.9 billion cubic meters when the Serb section of the Russia-backed South Stream gas pipeline is completed in 2016, he said.

“We are considering construction of gas plants and we are ready to establish joint ventures to invest in such projects,” in Serbia, Miller said. Gas deliveries to the plants would be at below market rates, enabling them to offer electricity at competitive prices, he said.

Serbia and Russia have an energy accord under which Gazprom Neft, the oil arm of Russia’s gas producer, acquired Serbia’s top oil and gas company Naftna Industrija Srbije AD (NIIS) in 2009, while Serbia was included in the South Stream project.

“The Russian Federation is certainly our most important foreign partner,” Serbian Prime Minister Ivica Dacic said. He said he’ll visit Moscow next month to discuss a broader “strategic partnership agreement.”

The Serb stretch of the South Stream, estimated to cost 1.7 billion euros ($2.2 billion) and entering the country from Bulgaria, will improve Serbia’s energy security and support its economic growth, Miller said. Serbia’s sole supply route for gas now comes from Hungary and suffered disruptions during Russia’s price disputes with Ukraine.

Source Bloomberg