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18 Oct, 2007 01:29

Gazprom buys into Serbian energy assets

Russia's gas company Gazprom and Serbia have agreed in principle to build a joint gas pipeline project worth more than $US 800 million.

Russia’s also looking to buy Serbian state energy company NIS, and to construct an underground gas storage facility on Serbian territory.

Serbian energy and mining minister, Aleksandar Popovic, believes the projects will help both Gazprom and Serbia to develop new potentials that were not even thought of a decade ago.

“Serbia is dependant on the import of gas and oil, and certainly a partnership with of such a strength and magnitude of possibilities will mean that Serbia can become an energy centre and an important transit route in this part of Europe,” the minister said.

In winter, Serbia consumes about 10 million cubic metres of gas every day. At the moment, it relies on Gazprom supplies coming through Ukraine and Hungary. Serbia suffered from gas shortages during Russia’s 2006 gas dispute with Kiev.

The proposed pipeline would link to the ‘Blue Stream’ pipeline running from Russia to Turkey via the Black Sea.

It could mean the construction of an underground gas storage facility in northern Serbia.

The deal will give Russia more control over Balkan energy networks – through which much of Western Europe’s gas and oil is supplied.

Other sectors winning from closer ties include banking and tourism. Russian businesses have already bought the country’s largest travel agency Putnik.

Some analysts say Russia is investing in Serbia in order to support Belgrade’s opposition to independence for Kosovo.

But Serbian officials say the strategic partnership is simply aimed at generating extra revenue to help the country recover from years of wars and economic sanctions.