July 20, 2007 / 12:38 PM / 12 years ago

Serbs await Russian decision on South Stream route

BELGRADE, July 20 (Reuters) - Serbia’s plans on expanding its gas infrastructure depend on whether Russian gas giant Gazprom (GAZP.MM) includes it in its “South Stream” gas pipeline project, an Energy Ministry source said on Friday.

“All our plans are on hold until Gazprom decides the South Stream pipeline route,” the source told Reuters. “All we can do is keep our fingers crossed and wait.”

Gazprom and Italy’s oil company Eni (ENI.MI) announced late in June the plan to build the pipeline to take 30 billion cubic metres of Russian gas a year under the Black Sea to Europe.

“If they choose Serbia, then we will not waste effort on a smaller local pipeline,” the source said, speaking after Energy Minister Aleksandar Popovic ended a visit to Moscow where he discussed cooperation with Gazprom.

Serbia initially planned an 80-km gas pipeline between Nis in the south and Dimitrovgrad, on the border with Bulgaria.

But late last year, its gas monopoly Srbijagas and Gazprom signed a memorandum to study the construction of an $800 million gas pipeline stretching from Bulgaria via Serbia and Croatia to Italy, that would in part run along the Nis-Dimotrovgrad route.

Serbia had hoped the segment through its territory, with a capacity of 20 billion cubic metres a year, would ultimately be linked to the Blue Stream pipeline from Russia to Turkey under the Black Sea.

If joining South Stream fails, Serbia will offer Gazprom to explore other business alternatives, including the construction of underground gas reservoirs, the source said.

Serbia has started pumping gas into its sole, 800 million cubic metre, gas storage unit at Banatski Dvor, 40 kilometres away from the border with Romania, but plans to explore other sites for more reservoirs, the source added.

“There are at least a couple more sites for storage units, at Mokrin, close to Banatski Dvor, and in central Serbia,” the source said.

Like most European countries, Serbia faced gas shortages a year ago due to a spat between Gazprom and Ukraine over transport fees.

Storage units should reduce Serbia’s reliance on gas flows, which come from Russia, via Ukraine and Hungary. Serbia consumes around 10 million cubic metres of gas a day during the winter.

The government hopes to clinch some 3.0 billion euros ($4.14 billion) worth of investments in the energy sector over the next three years, giving Serbia a key role in the transit of electricity, natural gas and crude oil in the region.

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