Gazprom, Srbijagas Sign Deal To Set up JVs for South Stream Gas Pipeline, Storage Facility

The deal was signed by the Serbian gas monopoly's CEO Dusan Bajatovic and the chairman of Gazprom's management board, Alexei Miller, the government said in a statement.

Gazprom said in a separate statement a joint venture, called South Stream Serbia AG, will be set up in 30 days with the aim to design, build and operate the Serbian section of the pipeline designed to carry Russian gas to western Europe under the Black Sea. Gazprom will hold a 51% stake in the joint venture, while Srbijagas will own the remainder.

Another joint project company called Banatski Dvor will be set up to expand the existing underground gas storage facility with an active capacity of 450 million cubic metres, Gazprom said. Gazprom will hold a 51% stake in that project company and Srbijagas will have 49%. The deal is worth more than 1.0 billion dinars ($16.1 million/10.7 million euro), Srbijagas said in June.

The expansion of the gas storage facility is part of the deal, in which Gazprom acquired 51% of Serbian oil monopoly NIS  for 400 million euro in February. Under the same deal, Gazprom pledged to invest 547 million euro in NIS and expand the storage capacity of Banatski Dvor located near the northern Serbian city of Novi Sad.

The South Stream gas pipeline, estimated to cost some 10 billion euro ($14.7 billion), will carry some 63 billion cubic metres of Russian gas yearly to Western Europe. The undersea section will begin in Russia and would come ashore at the Bulgarian Black Sea of port of Burgas. The onshore section will then stretch from Bulgaria via Greece to Italy in the south and will branch out to Austria in the north.

(1 euro=93.1660 Serbian dinars)