Serbia eyes favorable conditions for future Russian gas imports: Vucic

Serbia hopes to be able to secure favorable terms for future gas imports from Russia once their current arrangements expire at the end of May, Serbia's President Aleksandar Vucic said following a meeting in Moscow on May 9 with Russian President Vladimir Putin.

Serbia remains largely dependent on Russian gas imports delivered via the TurkStream pipeline and onshore pipeline infrastructure in Bulgaria. It is also a key transit country for Russian gas flows onward to Hungary.

The current Russian contract for gas supply to Serbia was agreed upon in May 2022 for the delivery of 2.2 Bcm/year -- the equivalent of some 6 million cu m/d -- at 100% oil-indexed prices.

"We still have a long-term contract, and we had very good conditions," Vucic said in a Kremlin statement. "We hope that it will be possible for us to maintain these conditions and even improve them."

Putin said Russia remained the "guarantor" of Serbia's energy security, with Gazprom not only meeting its contractual obligations to Serbia but also supplying additional volumes at Serbia's request.

"Reliability of supplies creates conditions for stable economic activity in Serbia," Putin said.

Current contract

Serbia is also hopeful that the current conditions for gas supply from Russia will be maintained if a new contract is not in place by the end of May.

"I believe that if the May 31 deadline is exceeded, we will receive conditions for it to be extended under the same conditions as before," Vucic was quoted as saying by state broadcaster RTS late May 9.

"Our specialists will soon start drawing up a long-term contract, but what I want to believe -- and I think will be the case -- is that Serbia will receive favorable conditions for obtaining Russian gas in the years ahead," he said.

The oil indexation element of the existing Russian contract meant Serbia paid much lower prices than much of Europe during the energy crisis in 2022 and 2023.

European hub gas prices remain high, having hit record levels in summer 2022.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at an all-time high of Eur319.98/MWh on Aug. 26, 2022.

Platts last assessed the TTF month-ahead price on May 9 at Eur34.55/MWh.

Additional volumes

In October 2024, Serbian officials said the country had agreed to buy an additional 2 million cu m/d of Russian gas to supply Russian companies in Serbia over the past winter, with access to an additional 3 million cu m/d if needed.

The head of Serbia's gas company Srbijagas said in March that Serbia's gas consumption was "uneven" with large seasonal variations.

"It is important for us to maintain the flexibility we had with the Russian side, that they deliver us additional quantities of gas in the period of high consumption," Srbijagas General Director Dusan Bajatovic said.

He said Serbia was eyeing 2.5 Bcm/year for a period of no less than three to 10 years.

In December, Serbian Deputy Prime Minister Aleksandar Vulin said Serbia hoped to procure additional Russian gas supplies as part of new contractual arrangements.

Despite its close relations with Moscow, Serbia has recently diversified its gas supply and can now import gas from Azerbaijan via a separate interconnector with Bulgaria.

The new 1.8 Bcm/year interconnector started operations in December 2023, enabling Serbia to source gas from Azerbaijan and regasified LNG via Greece and Turkey for the first time.

In November 2023, Azerbaijan's state-owned Socar agreed to supply Srbijagas with up to 400 million cu m of gas in 2024 under a wider strategic energy pact signed between Baku and Belgrade.

Serbian Energy Minister Dubravka Dedovic Handanovic said Serbia hoped to import up to 400 million cu m/year of gas from Azerbaijan until 2026. "From 2027, those quantities can increase up to three times," she said at the time.