Oil Report

Serbia, Gazprom sign deal for South Stream storage

BELGRADE, Feb 5 (Reuters) - Serbian gas monopoly Srbijagas and Russia's Gazprom GAZP.MM signed a deal on Friday formally creating a joint venture to manage a major underground gas storage as part of the future South Stream pipeline.

Under provisions of the deal, Srbijagas will have a 49 percent stake in the joint venture in the northern town of Banatski Dvor. Gazprom will hold the remainder, said Dusan Bajatovic, Srbijagas’ CEO.

“The new company will be formally registered in Serbia on Feb. 8,” he said.

By the end of 2010, the Banatski Dvor storage will be filled with 470 million cubic meters of gas which is sufficient to cover Serbia’s needs, Bajatovic said.

The storage will be a part of a wider Gazprom-led South Stream pipeline project that has been designed to bypass Ukraine to transport Russian gas under the Black Sea to Bulgaria and onwards to Serbia and Europe.

“We are currently producing a feasibility study and considering legal and technical aspects of the part of the South Stream project in Serbia,” Bajatovic said.

In 2008 Serbia and Russia made a wider energy pact that included the sale of Serbia's oil monopoly NIS to Russia's Gazpom Neft SIBN.MM for 400 million euros in cash and 500 million euros in pledged investments in return for Belgrade's inclusion in the South Stream project.

Bajatovic said the expansion of the Banatski Dvor storage will depend on the future of the South Stream project and domestic demand.

Serbia is considering building another similar facility near the existing one to boost total storage capacity to one billion cubic meters of gas, he said. (Reporting by Aleksandar Vasovic; Editing by Adam Tanner)