Serbian Government Approves Deal With Gazprom

MOSCOW. May 12 (Interfax) – The Serbian Cabinet of Ministers approved an oil and gas deal with Russia on Friday, involving the sale of the country’s biggest refinery to Gazpromneft (RTS: SIBN), and recommended that the parliament ratify the documents.

Following the government’s decision the deal must be approved by the new parliament formed after the early parliamentary elections on May 11.

The Russian-Serbian inter-governmental agreement on oil and gas cooperation and the protocol of the basic terms, whereby Gazpromneft acquires 51% in Naftna Industrija Srbije, or NIS (Petroleum Industry of Serbia), were signed in Moscow on January 25.

The agreements allow Serbia to join the South Stream gas pipeline project. The Serbian section of the future gas pipeline will enable Russia to transit and supply its gas to the Balkans and other European countries through the Black Sea, Bulgaria and Serbia.

An underground gas storage facility with an active capacity of at least 300 million cubic meters is planned will be built at the site of the exhausted gas field in Banatski Dvor, located 60 kilometers northeast of Novi Sad, Serbia.

The South Stream gas pipeline, which is about 900 kilometers long and has a capacity of up to 30 billion cubic meters of gas per year, will stretch from Dzhubgi district in Russia’s Krasnodar Territory towards Varna in Bulgaria across the Black Sea. It then will continue in two directions: toward northern Italy and toward the central Europe. Italy’s Eni is Gazprom’s (RTS: GAZP) partner in the construction of the South Stream’s underwater section.

The gas pipeline construction is due to begin in 2008 or 2009, gas supplies in 2013. The cost of the project is estimated at more than $10 billion.

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