Serbia cemented its ties with Russia yesterday, allowing Moscow a major role in its economy through an agreement with energy giant Gazprom to develop the Balkan country’s oil and gas industry.
The move, which follows a similar deal last week between Russia and Bulgaria, was widely seen as increasing Moscow’s energy presence in the region and confirming Serbia’s Russian links.
“The government of Serbia adopted... the draft agreement with the government of Russia on cooperation in the energy and gas field,” a government statement said.
The deal covers a pipeline to be built by Gazprom in southern Serbia and an underground gas storage facility in northern Vojvodina province, as well as the sale of the oil monopoly NIS, it said.
Last month, Gazprom offered –400 million for 51 percent of NIS.
Gazprom also promised to invest 500 million euros in the company and ensure passage via Serbia of the planned 900-kilometer (560-mile) South Stream pipeline – also the subject of the Bulgaria deal – to transport gas from Russia to Southern Europe. Serbian Infrastructure Minister Velimir Ilic said the accord was “strategic and the biggest investment in Serbia so far.”
“The accord will be signed on January 25 in Moscow and this is the best news for Serbian businessmen and our citizens,” Ilic told B92 radio.
The green light on the project, negotiated for several months, comes at a crucial moment for Serbia between two rounds of presidential elections that see a runoff between the pro-European incumbent President Boris Tadic and Russophile ultranationalist Tomislav Nikolic, who had led Sunday’s polls.
Conservative Prime Minister Vojislav Kostunica, who is in favor of closer ties with Russia, did not support Tadic in the first round and local media have speculated that the accord with Gazprom was highly politicized.
The government coalition had previously delayed agreement on the deal due to reservations by ministers from Tadic’s pro-reform Democratic Party.
But ministers from the Democratic Party of Serbia of Kostunica pushed strongly for the deal, claiming it was crucial for Serbia’s economic development.
“This is the biggest economic project in Serbia and this accord will guarantee major economic development of our country,” Kostunica told reporters later yesterday. “If there had been no deal, Serbia would have been isolated in the energy field,” he said.
“Russia improved its offer, as the future pipeline will not be just a leg but the main one, making Serbia the energy leader in the region,” the prime minister added.
According to “conservative estimates, the investment is worth –1.5 billion,” Serbian Energy Minister Aleksandar Popovic said.
Serbian Economy Minister Mladjan Dinkic had openly opposed the deal over NIS, saying if the company was sold by tender, “the price could be five to eight times higher than the Russian offer.” Serbia has stepped up its political and economic links with Russia which backs its opposition to the independence of Kosovo, expected to be proclaimed soon by the breakaway province’s ethnic Albanian leadership.
Economy analyst Misa Brkic said the accord was without precedent.
“With this accord, Serbia hands over its energy independence into Russian hands,” Brkic told AFP.
“The deal will enable Moscow to possibly influence political life in Serbia in the long term,” he said.