Gazprom and Srbijagas commission South Stream’s first facility – Banatski Dvor UGS
Led by Alexey Miller, Chairman of the Gazprom Management Committee the Company's delegation paid a visit to the Republic of Serbia today.
As part of the visit, a working meeting took place between Alexey Miller and Boris Tadiс, President of the Republic of Serbia. The parties discussed the cooperation in the petroleum sector placing an emphasis on the prospects for the South Stream project. It was noted that the South Stream construction in Serbia would help fulfill the industrial potential of the Republic. In particular, the new project will create about 2,200 workplaces in Serbia and attract up to EUR 1.5 billion of direct investments.
The meeting reviewed the issues relevant to formulating the terms and conditions for long-term Russian gas deliveries to Serbia, developing local oil refining and petrochemical capacities as well as establishing gas-fired power plants supplied by Gazprom on special terms.
The meeting resulted in signing of a Memorandum by Alexey Miller and Dusan Bajatovic, Director General of state-owned Srbijagas in the presence of Boris Tadiс. The Memorandum outlines the parties' intent to sign in the nearest future a long-term purchase and sale agreement for natural gas, with annual gas supplies hovering around 2 billion cubic meters.
Boris Tadiс and Alexey Miller took part in the events dedicated to inauguration of Banatski Dvor, one of the largest underground gas storage facilities in Southeastern Europe. Its working gas volume makes up 450 million cubic meters, maximum deliverability – 5 million cubic meters per day. Besides, Banatski Dvor has a potential for further expansion. The UGS facility enhances the security of Russian gas export to Hungary, Serbia, Bosnia and Herzegovina.
Boris Tadiс and Alexey Miller also visited the Pancevo oil refinery owned by NIS – Gazprom neft, examined the ongoing upgrade operations and took part in the unveiling of a new control room within the unified management system for the refinery production sites. The refinery upgrade enables Gazprom Group to build up supplies of petroleum products and fuels meeting high European standards in the Serbian market.
“The Banatski Dvor UGS facility, upgrade of the Pancevo oil refinery and the South Stream gas pipeline will fundamentally improve energy security in Serbia. Cooperation with Gazprom makes Serbia a huge European center for gas transit and storage as well as a significant producer of petroleum products.
This offers new opportunities to Serbia, including the national economy growth and transformation into a prominent player in the European energy market.
In fact, the Banatski Dvor UGS facility commissioning means the launch of the first facility within the South Stream project,” said Alexey Miller.
In 2010 Gazprom supplied Serbia with 2.1 billion cubic meters of natural gas.
Founded on October 1, 2005 by the Serbian Government within the reorganization of the state-owned Naftna Industrija Srbije – Serbian Oil Industry, Srbijagas is the Serbian state-owned company dealing with natural gas transmission, distribution and storage in Serbia.
With a view to diversify the natural gas export routes Gazprom is constructing a gas pipeline running under the Black Sea to the countries of Southern and Central Europe – the South Stream project. Intergovernmental agreements were signed with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria in order to implement the onshore gas pipeline section.
On January 25, 2008 Russia and Serbia signed the Umbrella Intergovernmental Agreement for the South Stream project and the Banatski Dvor UGS facility.
On May 15, 2009 Gazprom and Srbijagas signed the Basic Agreement of Cooperation for the South Stream project in Serbia. In November 2009 registration of the joint project company, South Stream Serbia AG, was accomplished. Gazprom holds a 51 per cent stake in the company and Srbijagas – a 49 per cent stake.
In October 2009 Gazprom and Srbijagas signed the Agreement on setting up a joint venture (JV) for the Banatski Dvor UGS facility. The joint venture responsible for construction and operation of the underground gas storage facility was registered in February 2010. The joint venture has the following shareholding structure: Gazprom – 51 per cent, Srbijagas – 49 per cent. The Banatski Dvor UGS facility was created on the basis of the eponymous depleted gas field situated 60 kilometers to the north-east of Novi Sad.
In January 2008 Gazprom neft signed an agreement on the terms and conditions for the acquisition of a control stake (51 per cent) in state-owned Naftna Industrija Srbije (at the moment, NIS – Gazprom neft).
NIS – Gazprom neft is one of the largest vertically integrated oil companies in Central Europe. It deals with oil refining, petroleum products marketing and hydrocarbons production in Serbia and Angola. The company annually produces 1 million tons of oil. It owns oil refineries in the towns of Pancevo and Novi Sad with the total capacity of 7.3 million tons per year. NIS – Gazprom neft also has its own distribution network (about 500 filling stations and oil tank farms). Producing around 85 per cent of all domestically consumed petroleum products, the company is the leading petroleum products supplier in the Serbian market.
Gazprom neft is financing the Pancevo oil refinery upgrade and eco-projects. The investments account for EUR 547 million.