Following official discussions between the Presidents of Serbia and Russia in Moscow, representatives from Srbijagas and Gazprom have resumed negotiations to finalize a new gas supply agreement, with the current contract set to expire at the end of May. Dusan Bajatovic, General Director of Srbijagas, stated that the new agreement could last for up to a decade, though some risks still need to be addressed. He noted that the two leaders had agreed on continued cooperation, with only specific details left to be clarified.
A significant change in the proposed agreement involves increasing the annual gas supply from 2 billion to 2.5 billion cubic meters. While the quantity of gas is not a concern, flexibility in supply remains a challenge, particularly during cold winter periods when Serbia’s daily gas consumption can rise to 18 million cubic meters. The cost implications of this increase in demand are still under discussion.
A major concern is ensuring enough transport capacity during extreme weather conditions. Gas demand surges not only in Serbia but also in neighboring countries like Hungary, which consumes 22 million cubic meters per day and plans to continue purchasing Russian gas. Similarly, countries like Slovakia and other regional partners require steady supplies. Despite differing political views, many nations continue to rely on Russian gas to meet their energy needs.
Regarding the contract’s duration, Serbia is advocating for a ten-year agreement. Bajatovic believes this long-term arrangement is feasible but acknowledges that both parties must assess potential risks, especially the European Union’s plan to ban Russian gas by 2027. This raises concerns about how force majeure clauses would apply if geopolitical developments hinder one party from fulfilling the contract. Both sides need to ensure they are not penalized if unforeseen events disrupt gas delivery or purchase.
Currently, Serbia’s Banatski Dvor gas storage facility is filled to 76 percent capacity, serving as a safeguard for energy security in emergencies. Bajatovic confirmed that the formal expansion of the facility is already underway, with the first borehole completed.
As European countries work to fill their gas reserves ahead of the upcoming winter, Serbia is also focused on increasing its own reserves. Due to technical factors related to borehole drilling and pressure management, Serbia is currently injecting gas in one-million-cubic-meter increments. Bajatovic assured that the reserves will be fully stocked to ensure security in critical situations.
