Agreement signed on cooperation and realization of project for construction of gas pipeline for transit of natural gas across territory of Serbia

President of the Administrative Board of "Gazprom", Aleksej Miler, and CEO of "Srbijagas", Saša Ilić, have signed today (February 25, 2008) in Belgrade the Agreement on cooperation and realization of the project for construction of gas pipeline for transit of natural gas across the territory of Serbia.

Russia and Serbia signed the strategic agrement on cooperation in field of oil and gas on January 25 in Moscow. This agreement was signed in the presence of presidents of Serbia and Russia, Boris Tadić and Vladimir Putin, and it anticipated energy cooperation between the two countries in three fields.

The agreement anticipated procurement of 51% of "Petroleum Industry of Serbia" by "Gazprom" for 400m EUR and investment in that company in minimum amount of 500m EUR prior to year 2012. According to the same agreement, negotiations about sale of NIS should be completed by the end of the year, when the final contract should be signed.

The agreement also includes construction of main gas pipeline, which will make Serbia part of so-called Južni tok (South flow) - the gas pipeline that provides supply of Russian gas to western Europe via Bulgaria, Greece and Italy.

The minimum capacity of the gas pipeline should be 10 billion cubic meters a year, and it is expected that Serbia will be collecting income in amount of 200m USD only from taxes.

The agreement also anticipates construction of underground gas storage in Banatski Dvor near Zrenjanin. For that purpose, joint venture will be founded, and Russian partner will own 51% of the company that will be responsible for construction and use of gas pipeline and underground gas storage.

Agreement on gas pipeline was signed on period on 30 years with the possibility of extension, while changes are possible only if both parties agree on them.

Project "Blue Brook" is currently one of the world's largest projects in gas sector and the value of the entire project is estimated to 5.4 billion USD.

The expectations are that the main gas pipeline will bring much benefit to the economy and citizens, first of all, secured supply, regional leadership in energy sector, reduction of consumption of electric and other types of energy and less polluted environment.