Russia signs Balkan pipeline deal with Serbia

Serbian and Russian officials have signed an energy deal they say will turn Serbia into a major hub for gas supplies to Europe and boost Russia’s economic influence in the region. The deal was signed in Moscow, where Serbia’s President Boris Tadic, Prime Minister Vojislav Kostunica, Foreign Minister Vuk Jeremic and other officials met President Vladimir Putin and their Russian counterparts. The agreement provides for the construction of a stretch of the South Stream gas pipeline in Serbia, including a major regional gas storage unit at Banatski Dvor. Under the deal Gazpromneft, the oil subsidiary of Russian gas monopoly, Gazprom, acquires a 51% stake in Serbia’s top oil and gas company, Naftna Industrija Srbije (NIS). The deal comes a week after Bulgaria joined the South Stream project, which is to have an annual capacity of 30 billion cubic meters of gas. The pipeline is to carry Russian gas via Bulgaria and Serbia to Hungary, Austria and Italy.

The Moscow visit comes amidst campaigning for the Feb. 3 run-off for the Serbian presidency. Tadic who heads the moderate Democratic Party, narrowly lost the Jan. 20 first round of voting to Tomislav Nikolic of the ultra-nationalist Serbian Radical Party—who has gained from fears of Kosova’s imminent secession. (Balkan Insight, Jan. 25)

The State Department-funded Radio Free Europe/Radio Liberty takes an ominous view of the deal. “There is the possibility that Russia could start using energy as a political tool in parts of Central Europe, like it has done in the East with Ukraine,” it quoted Mark Hester, editor of the UK-based journal Oil and Energy Trends.

RFE/RL also frets that the advancement of the South Stream project could spell the end of the competing Nabucco pipeline, an EU-backed project that would circumvent Russia by transporting gas from the Caspian and Central Asia to Europe via Turkey.

Last May, Moscow dealt a first blow to Nabucco when it signed an agreement with Turkmenistan and Kazakhstan to build a pipeline along the Caspian Sea coast to transport their natural gas to Europe via Russia. Then in June, Gazprom and Italy’s Eni further undermined Nabucco by signing the initial deal to build South Stream.

“Nabucco is not dead, but it is a patient that risks dying,” Federico Bordonaro, Rome-based energy analyst with the Power and Interest News Report, told RFE/RL. “[T]he economic viability of Nabucco now comes into question.” (RFE/RL, Jan. 25)

See our last posts on the Balkans, Russia and the Eurasian pipeline wars.

  1. Deep Purple fetes Russian petro-elite
    Well, the “moderate” Tadic has emerged victorious over the ongepotchket Nikolic, thank goodness. (Reuters, Feb. 4) Meanwhile in Russia, Dmitry Medvedev, the chief of Gazprom, has been all but anointed as Vladimir Putin’s sucessor. And those one-time bad boys of heavy metal, Deep Purple, have been called in to preside over the bash sealing the deal. It’s pretty terrifying that the leader of the resurgent super-power could be someone with such appallingly bad taste in music. From a Feb. 6 Reuters report, smarmily entitled “Russia’s Medvedev secures rock-for-gas deal”:

    MOSCOW – Deep Purple are heading for Moscow as a farewell gift to Dmitry Medvedev, the chairman of gas giant Gazprom and almost certainly Russia’s next president.

    Medvedev has told interviewers Deep Purple, known for hits such as “Smoke on the Water”, are his favourite band.

    The rock group will perform at a show Gazprom is putting on at the Kremlin to mark the 15th anniversary of the firm’s creation, industry sources told Reuters.

    Both Medvedev and outgoing president Vladimir Putin are expected at the party on Feb. 11. The British band’s management declined to comment.

    The first deputy prime minister and 70 other political figures and businessmen brought Deep Purple’s former lead singer to Moscow last year for a secret concert, local media reported.

    Putin, hugely popular at home, has all but guaranteed Medvedev’s victory in a March 2 presidential election after naming him as his preferred successor.

    Putin is known to enjoy patriotic Russian pop songs. It was not clear if the concert line-up would have anything to suit his tastes.

    If Medvedev becomes president, he will resign as Gazprom chairman. Prime Minister Viktor Zubkov is expected to take over the job in June.

    1. How appropriate
      Perfect anthem for the oil age…

      Nobody gonna take my car
      Im gonna race it to the ground
      Nobody gonna beat my car
      Its gonna break the speed of sound
      Oooh its a killing machine
      Its got everything
      Like a driving power big fat tyres
      And everything

      I love it and I need it
      I bleed it yeah its a wild hurricane
      Alright hold tight
      Im a highway star

      Take that, Al Gore!