Srbijagas, Gazprom Sign South Stream Deal

May 13, 2009
(Moscow Times ) - Srbijagas, Serbia's gas distributor, and Gazprom will sign an agreement to develop the Serbian arm of the South Stream pipeline on May 15, Srbijagas CEO Dusan Bajatovic said Tuesday.

The signing ceremony will be held during an energy summit in the Russian Black Sea resort of Sochi, he said.

"We agreed that the capacity of the pipeline will be either 21.4 billion or 23.1 billion cubic meters of gas annually and that the length of the pipeline will be around 450 kilometers," he said.

South Stream, under the Black Sea, and twin pipeline Nord Stream, running under the Baltic Sea, are crucial to Russia's plan to boost exports to Europe while bypassing transit countries such as Ukraine.

Serbia had to rely on gas supplies from Austria, Germany and Hungary during a January dispute between Russia and Ukraine that halted exports from Russia for almost two weeks.

Serbia and Russia agreed on the South Stream pipeline branch and on the sale of Serbia's NIS oil company to Gazprom in 2008.

Serbia will have a 49 percent of stake in a new Switzerland-based joint venture, Bajatovic said. "We cannot be outvoted there, as we have a mechanism that ensures that some key decisions cannot be made without us," he said.

In April, Serbia and Austria's Heat group signed a deal to upgrade the Balkan country's largest storage facility in the northern city of Banatski Dvor to a daily output capacity of as much as 5 million cubic meters of gas.

"The storage will be ready for filling as of July 1," Bajatovic said.

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