Contracts signed on supply of Russian gas to Serbia

Two agreements have been signed on the supply of Russian gas, providing Serbia with full security of supply and a lower price of gas in the next ten years.

Source: Tanjug

The contracts, valid through 2021, were signed at the Serbian government building on Wednesday.

The first document was signed by Deputy Chairman of Board of Directors of Gazprom Alexei Miller and YugoRosGaz Director Vladimir Koldin, while the other was signed by Miller and Srbijagas General Director Dušan Bajatović.

Russian Ambassador Alexander Chepurin and Serbian Minister of Natural Resources, Mining and Spatial Planning Milan Baćević were present.

The most important benefits of the new agreement on an annual supply of five billion cubic meters of gas are its flexibility, absence of penalties and possibility to additionally lower the price of gas.

Thanks to this long-term agreement, Serbia will purchase gas at preferential prices, which will be 13 percent lower than the previous ones, Miller said after signing the agreement.

He underscored that Serbia is Russia's strategic energy partner, which is illustrated by the signed agreements and a number of successful projects in the recent period, including the one related to cooperation on the Banatski Dvor underground gas storehouse, the construction of South Stream and in the Petroleum Industry of Serbia (NIS).

"We have very big plans for the future," Miller said, noting that the building of gas power stations in Serbia is being planned, which would get the gas at preferential prices, and produce electricity at lower cost that it had been the case so far.

He announced that via South Stream, gas would first come to the Bulgarian coast in December 2015, adding that gas deliveries to Serbia would start in 2016.

The amount of gas that would flow via South Stream is greater than the one envisaged by the long-term agreement, which stipulates that Serbia would get 1.5 billion cubic meters on an annual level, and 3.9 billion as part of South Stream.

Miller underlined that the contract will ensure lower gas prices for Serbia and steady, long-term supply, which is the best answer to those who posed questions as to why Serbia should sign agreements with Gazprom, claiming that it would be better to purchase gas on the spot market.

"What would these people say now, and how would they explain to the Serbian public, given that the price of gas on the spot market stands at USD 800 for 1,000 cubic meters," the Gazprom CEO asked.

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