Russian gas firm Gazprom said on Tuesday it has agreed terms for gas supplies to Bosnia's Serb Republic.
The deal was signed with Bosnian company Gas Res during a visit to Moscow by the president of the Serb Republic Milorad Dodik and the entity's prime minister, Zeljka Cvijanovic.
Gazprom said in a statement gas will be delivered to the Serb Republic from mid-2015 via existing pipelines until the launch of the South Stream pipeline branch on Bosnian territory.
The drafting of an intergovernmental agreement related to the construction of the South Stream pipeline is in its final stages, the statement said, adding that the pact would also cover expanding the use of gas in the energy sector.
On Monday, the government of the Serb Republic said Gas Res will buy gas directly from Gazprom - without any go-betweens - and will distribute it to customers on the entity's territory, making cheaper supplies possible.
Cvijanovic said in the government statement that a memorandum for cooperation was also signed in Moscow with Russian state-controlled oil company Zarubezhneft. The company plans to convert its majority-ownedoil refinery Rafinerija Nafte Brod [BANJ:RNAF-R-A] in Bosnia to run on natural gas instead of fuel oil, Cvijanovic added.
Dodik was quoted as saying in the statement that the intergovernmental agreement on South Stream should be signed in the coming 30 to 60 days.
The South Stream branch towards Bosnia is planned to split off from the section of the pipeline that will cross neighboring Serbia.
The South Stream gas pipeline, spearheaded by Gazprom, will carry gas from Russia to central and southern Europe via Bulgaria, Serbia, Hungary and Slovenia. In June, the Bulgarian government halted the construction of the pipeline on the country's territory until the project is brought in line with EU law.