Today the Kremlin saw the signing of the fundamental documents defining the Russian – Serbian partnership development in the energy sector in the presence of Dmitry Medvedev, President of the Russian Federation and Boris Tadic, President of the Republic of Serbia.

Alexey Miller, Chairman of the Gazprom Management Committee and Dusan Bajativic, Director General of Srbijagas state-owned company signed the Major Provisions of the Basic Cooperation Agreement on the construction of the South Stream gas pipeline and natural gas transit across Serbia, as well as the Memorandum of Understanding aimed at cooperating in the gas storage sector within the Banatski Dvor project.

The Basic Agreement forms the principles of cooperation between the parties at the pre-investment and the follow-up stages of the South Stream project. In particular, the Agreement sets the terms and the order for establishing, as well as the operating principles of the joint venture to be set up in the first quarter of 2009 in order to perform the investment rationale for the gas pipeline construction in Serbia and its subsequent operation. Gazprom will get 51 per cent in the joint venture and Srbijagas – 49 per cent.

In line with the Memorandum of Understanding aimed at cooperating in the gas storage sector the parties will perform an additional technical and economic assessment of the Banatski Dvor UGS project to lay the basis for the final investment decision to be adopted by the middle of 2009. In case positive results are obtained with the construction and operation review for the Banatski Dvor UGS facility, the parties will set up a joint venture with the following shareholding structure: Gazprom export – 51 per cent, Srbijagas – 49 per cent.

Pursuant to the accords fixed in the Intergovernmental Agreement of Cooperation in the oil and gas sector Alexander Dyukov, Chairman of the Gazprom Neft Board and Petar Skundric, Serbia’s Energy Minister signed a Purchase and Sale Agreement for a 51 per cent stake in Serbian Oil Industry (NIS).

“Serbia is one of our long-standing partners. We have been cooperating for 30 years now. Today we are facing new horizons and attractive prospects in terms of enhancing the integrated strategic cooperation.

Gazprom possesses all the resources required for upgrading the national energy complex and providing its effective functioning in the long term. By entering in NIS Gazprom will enable the Serbian oil industry not only to retain its positions, but to become the leader in the Balkan region.

The South Stream pipeline laying across the country and construction of a gas storage create extra conditions for transforming Serbia into a large European hub for natural gas transit and storage. The country will contribute significantly to securing gas supply reliability for entire Europe,” said Alexey Miller.

Background:

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

On January 25, 2008 the Umbrella Intergovernmental Agreement for the South Stream project and the Banatski Dvor UGS project was inked. In parallel, Gazprom Neft signed the Agreement on the acquisition terms for a controlling stake (51 per cent) in state-owned Serbian Oil Industry (NIS).

On February 25, 2008 Gazprom and Srbijagas signed the Agreement of Cooperation to implement a gas pipeline construction project for natural gas transit across the territory of the Republic of Serbia. Until the joint venture is set up the investment rationale will be developed by the Joint Working Group.

In line with the Intergovernmental Agreement the volume of natural gas transit across Serbia will be no less than 10 bcmpa.

Being one of the largest in Central Europe, Serbian Oil Industry (NIS) is a vertically integrated company dealing with refining of oil and marketing of petrochemicals and production of hydrocarbons in Serbia and Angola. The company’s annual output accounts for 1 mln t of oil.

The Company is the owner of oil refineries in the towns of Pancevo and Novi Sad with the total capacity of 7.3 mln t per annum.

NIS possesses its own sales network (some 500 filling stations and petroleum storage depots), is the leading supplier of petrochemicals on the Serbian market, producing in the order of 85 per cent of all domestically consumed petrochemicals.