Serbia’s Gas Company Chief Announces New Gas Arrangement with Russia for October

Oil and gas company NIS (BETAPHOTO/EMIL VAS)

Dusan Bajatovic, general manager of Serbia’s natural gas provider Srbijagas, said on Sept. 23 that negotiations on a new gas arrangement with Russian energy corporation Gazprom would be finalized this week, adding that a new contract would be signed in October.

Speaking to state public broadcaster RTS, Bajatovic said that the contract should be signed for a three-year period, envisaging 2.5 billion cubic meters of gas annually.

“We will finalize the talks this week, but a gas arrangement will not be signed in September, but in October. The existing contract will be extended for a month, under the applicable conditions, that is, the formula pricing for crude oil and additional quantities,” Srbijagas GM said.

He also said that a new contract was facing challenges amid the announced new set of sanctions against Moscow and Russian companies by the European Commission.

“It would probably not affect gas transported via the TurkStream (Turkish Stream). We have agreed procurement of 2.5 million of cubic meters of gas on a daily basis with Azerbaijan, and around 9.5 million cubic meters per day with Russia, atop the volume in underground gas storage Banatski Dvor. Banatski Dvor stores 780 million cubic meters of gas, half of which belongs to Russian and the other half to Serbia. Also, we will have an additional 200 million cubic meters of gas stored in Hungary,” Bajatovic explained.

He also noted that very few European countries were well prepared for the upcoming winter season.

“Serbia’s storage facilities are above 90 percent full, those in Europe above 80 percent of their capacity. Is there enough gas? No. But, there is for us. So, it will result in certain price hikes. One of the ways this will affect us is the formula pricing for crude oil, which will be taken into account in calculating the price for Serbia. However, at this moment I would rather not make any comments, because there is a new clause in the arrangement with Serbia prohibiting us to discuss the price publically, because the price granted to Serbia has always been more favorable than for other markets,” Bajatovic specified.

He also stated that there would be no price hikes for households in Serbia, adding that in case of any increase for distributors or households, the difference would be covered by Srbijagas.

Bajatovic further said that gas storage could cover consumption for at least three months.

“We have 60 percent of the supply required for the winter season, but the problem is that production in Banatski Dvor is limited to five, that is six million cubic meters per day. We are covered for at least three months, possibly even five months, including the storage capacity in Hungary and the planned supply from Azerbaijan,” Bajatovic said.

Commenting on the upcoming US decision regarding sanctions against oil and gas company Naftna Industrija Srbije (NIS), Bajatovic said that Serbian President Aleksandar Vucic had requested a meeting with US Secretary of State Marco Rubio, adding that Vucic would certainly talk with US representatives.