Serbia does not plan to increase regulated household gas prices despite a sharp rise in European wholesale costs, relying on its oil-indexed Russian supply contract, high storage levels and additional reserves held in Hungary.
European gas prices have increased by almost 30% since April, reaching around €65/MWh, according to Srbijagas general director Dušan Bajatović. Brent crude moved above $90 a barrel, adding further pressure to energy costs ahead of the winter heating season.
Bajatović attributed the increase to stronger European and Asian demand, slower replenishment of EU storage facilities, tighter LNG supply and the gradual reduction of Russian gas imports into Europe.
Most Serbian industrial customers will continue receiving gas under the country’s long-term arrangement with Russia. The pricing formula is linked to oil rather than directly to European hub prices, providing some insulation from short-term gas-market volatility. Bajatović expects the impact to remain manageable while crude oil stays below $100 a barrel.
The commitment to hold household tariffs protects consumers but transfers more market risk to Srbijagas and potentially to the state balance sheet. A sustained rise in oil-indexed contract prices without a corresponding tariff adjustment would compress the company’s margin unless the difference is absorbed through cross-subsidies, accumulated liquidity or budget support.
Serbia’s storage position is comparatively strong. The Banatski Dvor underground facility is approximately 93% full, holding around 482mn cubic metres. Additional Serbian reserves in Hungary are being replenished at 1–1.2mn cubic metres a day.
Expansion of Banatski Dvor is continuing despite delays associated with international sanctions. Six of 12 planned new wells have been drilled, compressor equipment has been procured and an additional production line is expected to enter construction. Following the upgrade, maximum withdrawal capacity is projected to reach 12mn cubic metres a day.
Serbia can also access alternative supply through Azerbaijan, Greece, Turkey and north-western European markets, although these routes are currently more expensive than Russian gas. Work is progressing on a Romanian interconnector and on a proposed gas-fired power plant near Niš being developed with Azerbaijan.
Bajatović expects Russian deliveries to remain unaffected before 1 January 2028 and expressed confidence that the supply agreement will be extended. The immediate winter position appears secure, but maintaining unchanged household prices will become progressively more expensive should oil remain above $90, European LNG markets tighten further or geopolitical restrictions interfere with existing contractual and payment arrangements.
