As part of the working visit by the Russian Federation President Dmitry Medvedev to the Republic of Serbia, Alexey Miller, Chairman of the Gazprom Management Committee took part in the meeting with Serbian President Boris Tadic in Belgrade today.

Alexey Miller and Dusan Bajatovic, Director General of the state-owned Srbijagas signed in the presence of Dmitry Medvedev and Boris Tadic the Protocol on the Serbian section of the South Stream project. The document provides that within 30 days the parties will set up a joint engineering company (JEC), South Stream Serbia AG, to deal with engineering, construction and operation of the South Stream gas pipeline in Serbia. Gazprom will hold 51 per cent in the JEC, Srbijagas – 49 per cent.

In addition, Alexey Miller and Dusan Bajatovic signed the Agreement on Setting Up a Joint Venture for the Banatski Dvor UGS Facility. The Agreement defines the procedure, terms and conditions of incorporation, as well as the operating mechanisms for the joint venture to be responsible, inter alia, for the construction and operation of an underground storage with the active capacity of 450 million cubic meters. The shareholding structure in the Banatski Dvor UGS joint venture is as follows: Gazprom – 51 per cent, Srbijagas – 49 per cent.

“South Stream and Banatski Dvor are the projects of strategic importance to the entire Southeastern Europe. Once constructed, the transnational gas pipeline will diversify the Russian gas export routes and cut the transit risks, while the UGS facility will help optimize the amount of hydrocarbons supply in line with seasonal fluctuations.

Comprehensive execution of the projects will reinforce Serbia’s energy security, provide the financial, resource and technological basis for the country’s industrial development making it a key player on the Balkan gas market,” stated Alexey Miller.

Background:

In 2008 Gazprom export supplied Serbia with 2.2 billion cubic meters of natural gas.

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

Gazprom is investigating the possibility of constructing a pipeline across the Black Sea to South and Central Europe – the South Stream project – in order to diversify natural gas export routes.

On January 25, 2008 Russia and Serbia signed the Umbrella Intergovernmental Agreement for the South Stream project and the Banatski Dvor UGS project.

On December 24, 2008 Gazprom and the state-owned Srbijagas signed the Major Terms of the Basic Agreement of Cooperation for the South Stream project implementation in Serbia, and the Memorandum of Understanding to cooperate in natural gas storage within the Banatski Dvor UGS project.

On May 15, 2009 the parties signed the Basic Agreement of Cooperation for the South Stream project in Serbia. The document sets the specific principles of interaction between the parties and defines the procedure, terms and conditions of incorporation, as well as the operating mechanisms for the JEC.

The Banatski Dvor UGS facility will be based on a depleted gas field with the same name. The field is located 60 kilometers northeast of the city of Novi Sad.