Energy Crisis

Putin, Vučić agree on new gas supply contract for Serbia

Serbia agrees new gas supply contract with Russia - Vucic

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Published

May 30, 2022

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Published:

May 30, 2022

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Serbia has agreed with Russia on a new long-term gas contract as the existing agreement expires on May 31. The agreement drew the attention of global news outlets, considering the sanctions the Western countries imposed on Russia and their intention to stop using Russian gas.

Serbia’s ten-year contract on gas supplies expired in December 2021, so the two sides agreed at the time to extend it for six months. The current price is USD 270 per 1,000 cubic meters, and the new one, in the upcoming three-year contract, should be around USD 340-350, local media quoted Vučić.

It is an increase of almost 30 percent, but market prices in Europe are around US 900 or five times higher than before the energy crisis and the war in Ukraine.

President of Serbia Aleksandar Vučić said he reached a favorable agreement on the procurement of Russian gas in a telephone conversation with President of Russia Vladimir Putin.

The details of the contract will be specified over the coming days

The details of the contract and the quantities will be determined over the next few days. The price will continue to be linked to oil, he added.

The deal means that Serbia will have by far the most favorable price in Europe, said Vučić.

He pointed out the deal refers to the delivery of 2.2 billion cubic meters of gas per year and that Serbia needs 800 million cubic meters, citing economic growth.

Three countries stopped buying Russian gas

After the war in Ukraine started, only Bulgaria, Finland, and Poland stopped buying Russian gas in Europe. Gazprom terminated the deliveries because they refused to pay for gas in rubles in line with the new procedure introduced by Russia. It was established after the West imposed sanctions following Russia’s military intervention in Ukraine.

Many European countries have long-term contracts with Gazprom. The prices depend on bilateral political and economic relations with Russia, and not only on the oil and gas prices on the market. But it is not likely European Union countries would continue to sign long-term contracts with Russia, having in mind that the European Commission proposed the REPowerEU plan to become independent from Russian fossil fuels well before 2030.

The Western media reported on the new gas agreement between Serbia and Russia.

Many countries have long-term gas agreements with Russia

While the war in Ukraine is raging, the Serbian president said he secured a very favorable gas contract in talks with Russian President Vladimir Putin, AP reports. The agency noted that Vučić refused to explicitly condemn the Russian aggression on Ukraine and to impose sanctions.

S&P Global reported that Serbia’s obligation to continue importing Russian gas is contrary to the positions of the EU and some of its member states after Russia’s aggression against Ukraine.

Reuters: Vučić is Putin’s closest ally in Europe

The article points out that Bulgaria, Finland and Poland were left without gas when they refused to accept the new payment procedure, but also that it was accepted by companies from key European countries.

Reuters reported that Vučić revealed he also talked with Putin about expanding gas storage in Serbia.

Vučić, “Putin’s closest ally in Europe”, said the Russian president told him to give him a call “if there is anything more to be discussed.”

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