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Memorandum on construction of gas pipeline through Serbia signed in Moscow

Belgrade/Moscow, 20 December 2006

Serbian Minister of Energy and Mining Radomir Naumov, General Director of Serbian gas company Srbijagas Milos Milankovic and General Director of Russia's GazpromExport Aleksander Medvedev signed today a Memorandum of Understanding on the construction of a gas pipeline through Serbia.

From left: Aleksander Medvedev, Radomir Naumov and Milos Milankovic

Author: Tanjug

The signatories of the memorandum made an agreement to set up a joint working group whose task will be to consider the possibility of joint construction of the pipeline which would transport gas from Russia via Turkey, Bulgaria and Southeastern Europe, including Serbia, to the north of Italy.

The gas pipeline through Serbia will be 400 kilometres long and will stretch from the border with Bulgaria to the border with Croatia. The capacity of the pipeline would be between 18 and 20 billion cubic metres of gas per year.

The details will be defined after the working group considers the feasibility study by July 1, 2007.

Once the memorandum is signed, one of the most important programmes for the realisation of Serbia's Energy Development Strategy before 2015 will begin, i.e. the gasification of the country.

The gas pipeline will help Serbia attain the position of a key state in the region when it comes to the transport of natural gas.

The pipeline will be worth nearly $1 billion and pipelines running through Kosovo-Metohija and Montenegro can also join the central pipeline.

The Ministry of Energy and Mining announced on November 1 two tenders and adopted the National Gasification Plan last year which envisages the use of natural gas in over 400,000 households throughout the country.

Gazprom will also benefit from this pipeline as the company will have better and more stable access to the Serbian market.

Under the agreement from January, 2.3 billion cubic metres of Russian natural gas will be delivered to Serbia by the end of this year.

Following the signing of the Memorandum, Naumov said that this document shows that we have turned a corner in the future development of Serbia, and opens up a new chapter in cooperation between Serbia and Russia in the area of gas supply.

He recalled that work on designing the entire project began soon after Serbian Prime Minister Vojislav Kostunica and Russian President Vladimir Putin met in St. Petersburg.

According to Naumov, the signing of the Memorandum represents a continuation of the good cooperation between Russian and Serbian companies “GazpromEksport” and “Srbijagas”, as well as between the energy ministries of the two countries.

The Minister said that this project will be of historical importance for Serbia and will be realised soon, and transit taxes worth $50 million to $200 million annually are expected depending on the quantity of gas.

Naumov expressed conviction that during 2007 all decisions will be adopted and all projects will be finished which are required for constructing the pipeline which will connect Russia, through the Black Sea, Turkey, Bulgaria, Serbia, Croatia and northern Italy.

Medvedev said that within the framework of joint work on the basis of the Memorandum two important aspects will be considered: an additional supply of gas to Serbia and Serbia’s role as a transit country.

Milankovic stressed that realisation of this agreement offers a historical opportunity to Serbia to become a regional leader in the supply of natural gas and will offer “Srbijagas” a chance to become one of the most important partners of “GazpromEksport” in southeastern Europe.