Serbia-Gazprom gas relations, parliamentary discussions and issues

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Serbia and Russia signed a ten-year agreement on the deliveries of Russian gas to Serbia according to which Serbia can now purchase Russian gas at the price of USD 399 per 1,000 cubic metres, Assistant to the Serbian energy minister Petar Stanojevic told Tanjug on Thursday.

The price of gas for Serbia should drop to around USD 370 per 1,000 cubic metres this year due to the oil price drop on the global market in the previous period by 10 to 12 percent on grounds of which the price of gas is defined, Stanojevic stated.

He specified that Srbijagas company signed the agreement on gas with Gazprom representatives last week.

During the session of the Serbian parliament Committee on Economy which passed the bill on the long-term agreement on deliveries of Russian gas to Serbia, Stanojevic noted that Serbia has an old debt for Russian gas worth USD 40 million.

Serbia will pay the debt which dates back to the period from the ’90s to 2001 in two instalments. It will transfer the funds from the first instalment this year and the second instalment will be paid in 2014, Stanojevic said and added that USD 175 million of the debt has been paid to Russia already.

The ten-year agreement on the delivery of Russian gas to Serbia will make it possible for the country to purchase 5 billion cubic metres of gas annually, which is 2.5 times more than now, Stanojevic said.

He specified that this would make it possible for Serbia to increase its energy security and it will open new development possibilities and construction of several gas power plants for combined production of electricity and heating.

Mihajlovic: Agreement with Russia favourable

The ten-year agreement on deliveries of Russian gas to Serbia does not envisage exact quantities or the price at which Serbia can purchase gas from Russia, Serbian Energy Minister Zorana Mihajlovic stated on Thursday and noted that the quantities will depend on Serbia’s needs on the annual level.

It is not bad that the agreement does not specify the price or quantity of gas, because these will depend on Serbia’s needs, Mihajlovic stated during the debate on the agreement in the parliament.

She noted that last week, Srbijagas closed the annual contract on supplying Serbia with Russian gas in 2013 at the price of USD 399 per 1,000 cubic metres and added that the price should be lowered to USD 370 due to adjustments of the oil price in the previous nine months as the basis for defining the price of gas.

Replying to the questions of MPs of the Liberal Democratic Party (LDP), Mihajlovic stated that the government is not closing the annual contract and is instead signing the framework agreement on deliveries of Russian gas to Serbia.

The government inherited the agreement on Russian gas and when such an agreement is negotiated, certain points can hardly be changed, Mihajlovic said and added that Serbia is the party which cannot affect all the points in the agreement.

LDP MPs underscored that the potential value of the Agreement on long-term Russian gas deliveries to Serbia totals around USD 25 billion, which is equal to the current public debt and the value of the country’s two annual budgets if the price of gas is roughly calculated at USD 500 per 1,000 cubic metres.

LDP MP Bojan Djuric asked whether Minister Mihajlovic supports the agreement which envisages that quantities of gas would total 5 billion cubic metres of gas annually and whether she signed it contrary to her will or under pressure by, say, Serbian President Tomislav Nikolic.

Mihajlovic asked the LDP MP whether this means that Serbia should not import Russian gas and if so, which country should be contracted for gas deliveries.

Serbia has been importing Russian gas for decades and it will now be transported from Russia via the South Stream pipeline, she noted and added that Serbia relies on Russian gas, just like other countries.

Source Agencies/ Parliament of Serbia