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Russia's Serbia energy blitz

By IGOR TOMBERG, UPI Outside View Commentator   |   Feb. 29, 2008 at 4:39 PM   |   Comments

MOSCOW, Feb. 29 (UPI) -- On Feb. 25 Russian First Deputy Prime Minister Dmitry Medvedev made a one-day working visit to Belgrade, the capital of Serbia. The presence of the foreign minister and his deputy shows the international importance of the visit in the context of Kosovo's self-proclaimed independence on Feb. 17.

"In the near future, we will also sign other oil-related agreements. This will create a firm foundation for further bilateral cooperation," Medvedev said.

He was accompanied by Foreign Minister Sergei Lavrov, his deputy, Vladimir Titov, and Gazprom CEO Alexei Miller. Medvedev also represented Gazprom as chairman of the board of directors. The main subject of the talks was to specify a framework intergovernmental agreement signed in Moscow in late 2007.

Russian Ambassador in Belgrade Alexander Alekseyev said that Russia and Serbia should compare their positions and outline new steps in the Kosovo direction.

Russia has already prepared a memo that specified all stages and deadlines of the pipeline agreement. In line with it, Gazprom will build a 400-kilometer leg of the South Stream pipeline on Serbian territory. Its capacity will be more than 10 billion cubic meters of gas per year, or one-third of all gas pumped through the South Stream. Gas will travel via this pipeline to Austria through Hungary.

In the evening of the same day, Medvedev received Hungary's consent to take part in the South Stream project. Prime Minister Ferenc Gyurcsany will visit Moscow to conduct talks with President Vladimir Putin and sign a relevant intergovernmental agreement on Feb. 28.

Serbia is about to complete the construction of the underground natural gas depot in Banatski Dvor with a storage capacity of about 300 million cubic meters of gas. The two sides will establish a joint venture for its modernization and use.

Gazprom Neft is going to buy the controlling stake in Serbia's biggest oil and gas company Naftna Industrija Srbije for 400 million euros. It will invest 500 million euros into the latter's modernization until 2012.

Serbian experts estimate that the total price tag of the bill will be about 2 billion euros. This will be the biggest foreign investment into the Serbian economy in the last few decades.

Medvedev is confident that the agreement on bilateral cooperation on the South Stream pipeline deal will enhance Europe's energy security. "It will promote the interests of Russia and Serbia, and form a foundation for energy security in united Europe," he said at a meeting with Serbian Prime Minister Vojislav Kostunica.

The South Stream's ramified gas pipeline network is designed for the transit and supply of natural gas to the Balkans and other European countries from Russia via the Black Sea. The first cubic meters of gas will be pumped through it in 2013.

The total length of the Black Sea leg is about 900 km, and the maximum depth is more than 2 km. Every year, Europe will receive up to 30 billion cubic meters of Russian and Central Asian gas.

The South Stream is an alternative to Nabucco that provides for the laying of a gas pipeline from the Caspian Sea region to Austria via Turkey by 2011.

Medvedev admitted that during his short visit he wanted to "express support for Serbia in connection with the illegal unilateral proclamation of independence by Kosovo." He emphasized that these actions have violated international law, U.N. resolutions and other conventions.

During his meeting with Kostunica Medvedev promised that Russia will consistently defend Serbia's territorial integrity. "We are proceeding from the premise that Serbia is an integral state, and administers jurisdiction on its entire territory. We will adhere to this position of principle in the future, too," he said.

The timing of the visit to this hot spot of Europe is designed to resolutely reaffirm Russia's position on Kosovo and emphasize that it views Serbia as its strategic partner in Europe.

The priority of energy issues is also natural. A month before Medvedev's visit to Serbia, Putin said this about the Moscow energy agreements between the two countries: "These documents are of fundamental importance for the further promotion of bilateral cooperation. In fact, our two countries are putting their strategic partnership in the fuel and energy sphere on a legal footing."

He went on to say that "the signing of these agreements will turn Serbia into a key transit junction in a system of energy supplies to the south of Europe that is now being formed by Russia. This system will operate for a long time; it will be reliable and highly effective. Most important, it will considerably strengthen energy security in Serbia and the rest of Europe."

The approaching presidential elections in Russia vividly illustrate the similarities and differences in the political orientation of the current president and his successor. In 2000 Putin was working to preserve Russia's sovereignty, whereas Medvedev is concerned over Serbia's integrity. But Medvedev will be also working to enhance Russia's influence in the world with traditional instruments -- energy resources and big infrastructure fuel and energy projects.

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(Igor Tomberg is a senior research fellow with the Center for Energy Studies, the Institute of World Economy and International Relations at the Russian Academy of Sciences. This article was reproduced with consent from RIA Novosti. The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.)

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(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

© 2008 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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