Today at the St. Petersburg International Economic Forum 2010 Alexey Miller, Chairman of the Management Committee of Gazprom met with Dusan Bajatovic, Director General of Srbijagas.

The negotiations focused on development of the following joint strategic projects: the trans-national South Stream gas pipeline and the Banatski Dvor underground gas storage (UGS) facility. The parties pointed out the success of the joint ventures, South Stream Serbia AG and Banatski Dvor UGS, established for the respective gas infrastructure facilities construction and operation.

The meeting participants emphasized that the feasibility study for the South Stream section in Serbia was progressing in accordance with the agreed schedule and scope of work. As part of the Banatski Dvor project, primary governing bodies were shaped and a business model was approved for the joint venture. At present, the parties continue preparations for the UGS commercial operation startup.

During the negotiations Alexey Miller said: “Gazprom believes the South Stream gas pipeline laying and the UGS projects implementation in Serbia are inseparable from each other. We have always considered it necessary to use a comprehensive approach to the Serbian gas transmission system development. At the same time, we were seeking to arrange guaranteed gas supply to South and Central Europe, make Serbia a key player on the regional transit market, as well as ensure reliable gas deliveries to Serbian consumers – major industrial companies, small businesses, individual households.”

Background:

In 2009 Gazprom supplied 1.7 billion cubic meters of natural gas to  Serbia.

Founded on October 1, 2005 by the Government of the Republic of  Serbia within the reorganization of the state-owned Naftna Industrija Srbije –  Serbian Oil Industry (NIS), Srbijagas is the Serbian state-owned company dealing with natural gas transmission, distribution and storage in Serbia.

For the purpose of diversifying natural gas export routes Gazprom is  planning to construct a gas pipeline across the Black Sea to South and Central Europe – the South Stream project.

In order to construct the onshore section abroad, intergovernmental agreements were made with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria.

On December 24, 2008 Gazprom and Srbijagas signed the Major Provisions of the Basic Cooperation Agreement on the South Stream project implementation in Serbia; and on May 15, 2009 – the Basic Cooperation Agreement.

On November 17, 2009 the South Stream Serbia AG registration procedure was accomplished. The company was set up to design, finance, construct and operate South Stream in Serbia. Gazprom holds a 51 per cent stake in the company and Srbijagas – a 49 per cent stake.

On December 24, 2008 Gazprom and Srbijagas inked the Memorandum of Understanding on cooperation in  gas storage as part of the Banatski Dvor project.

In October 2009 the Agreement on Setting Up a Joint Venture for the Banatski Dvor UGS Facility was signed. The document outlined the procedure, terms and conditions of incorporation, as well as the operating mechanisms for the joint venture to be responsible for construction and operation of an underground storage with the working gas capacity of 450 million cubic meters.

The Banatski Dvor UGS joint venture was incorporated in February 2010 with the following shareholding structure: Gazprom – 51 per cent, Srbijagas – 49 per cent.