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Serbia Extends Gas Supply Deal with Russia Amid Ongoing Energy Negotiations

Serbia Extends Gas Supply Deal with Russia Amid Ongoing Energy Negotiations

Serbia has reached an agreement with Russia to prolong its gas supply deal for an additional three months, announced President Aleksandar Vučić on Tuesday, as the nation seeks to secure a more permanent arrangement.

This extension, which will remain in effect until March 31, follows the expiration of Serbia’s previous three-year contract with Moscow this past summer. Vučić stated that the short-term deal is crucial for ensuring that the country has sufficient electricity and gas supplies throughout the winter season.

“We have decided to extend gas deliveries for another three months… allowing citizens to feel secure and rest easily,” Vučić remarked. He indicated that if a long-term agreement is not achieved by year’s end, Serbia will start looking into alternative gas sources.

Serbia is significantly reliant on Russian energy supplies. As reported by Serbia’s gas company, Russia currently provides around 6 million cubic meters daily at approximately 290 euros ($342) per 1,000 cubic meters, while the European market price hovers around 360 euros ($424).

In addition to Russian gas, the country imports from Azerbaijan and has some domestic production, though it is insufficient to compensate for any reductions in Russian supply.

Although Serbia is a candidate for EU membership, it retains strong connections with Moscow and continues to purchase Russian gas at substantially lower prices than market rates.

Vučić has previously indicated that Russia’s preference for short-term extensions rather than a long-term deal might be a strategy to hinder Serbia from taking control of its state-run oil company, the Petroleum Industry of Serbia (NIS).

The oil sector has also been affected by U.S. sanctions targeting NIS due to its majority ownership by Russian entities. These sanctions, which have been in place since October 9, halted crude oil deliveries to the only refinery in the country, leading to a shutdown in late November.

Serbia is currently in discussions to sell Russia’s 56% stake in NIS to meet the demands of the sanctions. The government has set a mid-January deadline for this sale, after which it intends to appoint its own management team and propose a buyout.

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