Gazprom's business in Serbia

2023: Bulgaria imposes a fee of 20% of the cost of gas from Russia for its transit to Serbia

The Bulgarian authorities in October 2023 introduced a tax on Russian gas supplied through its territory. The commission will be about 20% of the current base price at the TTF hub and could jeopardize the supply of blue fuel to Hungary and Serbia.

Alexander Vucic on the sidelines of the Belt and Road summit in China did not hide the current state of affairs and commented on the situation with the words "We have a problem." According to the Serbian leader, "strange things" are happening in the gas market. The reaction of the Hungarian side was not long in coming: Peter Siyarto called the introduced measure "unacceptable" and promised an early response.

Usually the transit fee does not exceed 10% of the actual cost of gas. The Bulgarian prime minister commented on the decision to introduce a dachshund of 20% as follows: despite the sanctions, some states received permission to import Russian gas, but now there are alternative interconnectors, and Russian gas should not take advantage. The fee introduced by the Bulgarians allegedly creates the possibility of "true competition" with LNG (from the United States).

At the same time, the Bulgarians themselves lived for a long time at the expense of Russian gas, but after Bulgargaz refused to work according to the gas-for-rubles scheme in the spring of 2022, they were forced to hastily diversify sources and overpay for supplies, while Hungary was able to offset sharp jumps in exchange prices due to long-term contracts. As for Serbia, about 700 million m3 of gas is reserved in storage facilities, but Bulgaria's actions pose a threat to the country, as they will lead to an increase in the cost by about 100 euros per cubic meter.

The Minister of Finance of Bulgaria, however, believes that there is no problem, and the decision will not affect the importing countries. According to him, the essence of the tax is not to make gas more expensive for consumers in Hungary and Serbia.

Unlike the prime minister, Asen Vasilev said with childish spontaneity that the goal is for Gazprom to supply gas with losses. The introduced measure allegedly "complies with EU policy" and is designed to "reduce Gazprom's profit." The head of the Russian holding has already assured the Hungarian side that the company will continue to fulfill its obligations under the contracts. But in fact, all this can really lead to the fact that the Russian exporter will lose the lion's share of income and sooner or later consider supplies to Hungary and Serbia simply unprofitable. It must be understood that "true competition" looks something like this.

It is characteristic that Russian gas supplies through pipelines do not fall under sanctions, and as Serbs and Hungarians have already noted in a joint statement, the Bulgarian prime minister's argument is completely false. Bulgaria's decision violates not only solidarity in relation to the EU member state, but also EU rules on the application of customs duties and the free movement of goods. 

2020: Dependence on Russian gas

Зависимость ряда the European countries from Russian gas, data for 2019 and 2020

2008

Agreement on South Stream AG and UGS Banatsky Dvor

The transportation, distribution and storage of natural gas in Serbia is carried out by the state enterprise "Serbiyagaz," formed by the Government of the Republic of Serbia as a result of the reorganization of the state enterprise "Oil Industry of Serbia" on October 1, 2005.

In order to diversify natural gas export routes, Gazprom is implementing a project to build a gas pipeline across the Black Sea to the countries of Southern and Central Europe - the South Stream AG project. Intergovernmental agreements were signed with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria to implement the land part of the project.

On January 25, 2008, a comprehensive Intergovernmental Agreement was signed between Russia and Serbia on the South Stream AG project and the Banatsky Dvor UGS project.

Dmitry Medvedev led a Russian delegation to sign major energy deals with Serbia in 2008, when he was deputy prime minister.

Gazprom Neft acquires 51% of the Serbian Oil Industry

In January 2008, Gazprom Neft signed an agreement on the terms of acquiring a controlling stake (51%) of the state-owned company Oil Industry of Serbia (now NIS - Gazprom'neft JSC).

JSC "NIS - Gazprom'neft" - one of the largest vertically integrated oil companies in Central Europe, is engaged in the processing of oil and the sale of petroleum products, produces hydrocarbons in Serbia and Angola. The company's production volume is 1 million tons of oil per year. The company owns oil refineries in the cities of Panchevo and Novi Sad with a total capacity of 7.3 million tons per year. NIS - Gazprom'neft also has its own sales network (about 500 gas stations and oil depots), is a leading supplier of petroleum products in the Serbian market, providing production of about 85% of all petroleum products consumed in the country.

OAO Gazprom Neft finances the modernization of the Panchevo refinery and environmental projects. The volume of investments is 547 million euros.

Serbia has raised nearly $12 billion in foreign direct investment since 2003, but Russia's contribution has been modest, ranking 19th in the ranking of foreign investors. Bilateral trade turnover amounted to $4.04 billion in 2008, but it fell 47% in the first eight months of 2009, according to the Russian government. Russian exports to Serbia amounted to 86% of the volume of trade between the countries in 2008.

2009: Registration of South Stream Serbia AG

• On May 15, 2009 OJSC Gazprom"" and GP "" Serbiyagaz "" signed the Basic Cooperation Agreement on " project in Serbia.

• In October 2009, OJSC Gazprom and GP Serbiyagaz signed an Agreement on the creation of a joint venture (JV) of UGS Banatsky Dvor. The joint venture, whose functions include the construction and operation of an underground storage facility, was registered in February 2010. The shares in the joint venture were distributed as follows: Gazprom Group - 51%, Serbiyagaz - 49%. UGS "Banatsky Dvor" was created on the basis of the depleted gas field of the same name, located 60 km northeast of the city of Novi Sad.

Gazprom's project was part of the overall negotiations between Russia and Serbia. Belgrade requested a 1 billion euro loan and intended to use 350 million euros of the loan to cover part of the 2010 budget deficit, which it should keep within 3.5 percent of GDP to meet loan requirements (3 billion euros) from the International Monetary Fund. Belgrade plans to allocate the balance of the loan for the development of infrastructure, road and railway construction.

Russian President Dmitry Medvedev and Serbian President Tadic

Serbia has been severely affected by the global financial crisis. Serbian Foreign Minister Vuk Eremić described Dmitry Medvedev's visit to Serbia as a "historic day."

"All countries of the Western Balkans stand in the way of joining the EU, and only one Serbia has special ties with Russia, which makes our country more exceptional and stronger," Yeremich told state TV.

• In November 2009, the registration procedure for the joint project company (SEC) South Stream Serbia AG took place. The share of Gazprom in SEC is 51%, GP Serbiyagaz - 49%.

On November 25, 2009, it became known that Deputy Chairman of Gazprom Alexander Medvedev headed the board of the joint project company (SEC) South Stream Serbia AG (canton of Zug, Switzerland).

The board also includes Vlad Rusakova, head of Gazprom's strategic development department, and Alexander Khramov, head of the pre-investment research department of Gazprom's strategic development department.

From Serbiyagaz, the board included the general director of the company Dusan Bayatovich and his adviser Dragisha Martinovich.

Peter Kaiser, who lives in Zurich, is a member of the board of ZMB (Schweiz) AG, a subsidiary of Gazprom Germania GmbH in Switzerland, has been appointed director of the joint venture.

2010

In 2010, Gazprom delivered 2.1 billion cubic meters to Serbia. m of natural gas.

2011: Commissioning of UGS "Banatsky Dvor"

On November 21, 2011, a delegation of Gazprom OJSC headed by Chairman of the Board Alexei Miller visited the Republic of Serbia.

During the visit, a working meeting was held between Alexei Miller and President of the Republic of Serbia Boris Tadic. The parties discussed issues of interaction in the gas and oil spheres. Special attention was paid to the prospects for the implementation of the South Stream AG project. It was noted that the construction of the South Stream AG section on the territory of Serbia will contribute to the development of the industrial potential of the republic. In particular, the new project will create about 2,200 jobs in Serbia and attract up to 1.5 billion euros of direct investment.

The meeting considered issues related to determining the conditions for the supply of Russian gas to Serbia on a long-term basis, the development of oil refining and petrochemical capacities in the republic, the creation of electric generating capacities based on natural gas, which could receive fuel from Gazprom on special conditions.

Following the meeting in the presence of Boris Tadic, Alexey Miller and General Director of the State Enterprise "Serbiyagaz" Dusan Bayatovich signed a Memorandum fixing the intentions of the parties in the near future to sign a long-term contract for the purchase and sale of natural gas with an annual volume of supplies of about 2 billion cubic meters. m.

Boris Tadic and Alexey Miller took part in events dedicated to the solemn commissioning of the Banatsky Dvor UGS. Underground storage is one of the largest gas storage facilities in Southeast Europe. The active storage volume of UGS is 450 million cubic meters. m of gas, maximum capacity for extraction - 5 million cubic meters. m per day. Banat Court also has the potential for further expansion. UGS provides additional reliability of export supplies of Russian gas to Hungary, Serbia, Bosnia and Herzegovina.

Boris Tadic and Alexey Miller also visited the Panchevo refinery owned by NIS-Gazprom'neft JSC, where they got acquainted with the modernization of the enterprise and took part in the opening of a new operator room of the unified system for managing the refinery's production sites. The modernization of the plant ensures that Gazprom Group increases its presence in the Serbian market of petroleum products with fuel that meets high European standards.

"UGS" Banat Yard ', modernization of the Panchevo refinery, the South Stream AG gas pipeline will increase Serbia's energy security by an order of magnitude. In partnership with Gazprom, Serbia is actually becoming a major European center for the transit and storage of natural gas, a notable producer of petroleum products.

All this opens up new opportunities for Serbia to grow the national economy and turn into an important player in the energy market. Europe

In fact, the commissioning of the Banatsky Dvor UGS is the launch of the first facility within the framework of the South Stream AG project, "said Alexey Miller.