Russia politics: Quick View - Gazprom looks to deepen its involvement in Serbia

Content Type
Country Data and Maps
Institution
Economist Intelligence Unit
Abstract
No abstract is available.
Topic
International Relations, Politics, News Analysis, Forecast
Political Geography
Russia

Event

On November 29th the Serbian president, Aleksandar Vucic, met Aleksei Miller, the chairman of the Russian state gas monopoly, Gazprom, in Belgrade, the Serbian capital, to discuss increased Gazprom gas deliveries to Serbia.

Analysis

The background to the meeting was a 28% increase in Serbia's consumption of gas and a 26% year-on-year increase in Gazprom deliveries to Serbia in the first ten months of 2017. Serbia needs to expand its domestic network of gas pipelines. Mr Miller stated that Gazprom was ready to take part in this expansion, with extra deliveries of gas coming from the new TurkStream gas pipeline project. However, Mr Miller failed to commit Gazprom to bringing Serbia into the TurkStream project. Mr Vucic said that he would be taking up that matter with the Russian president, Vladimir Putin, during their meeting later this month. Serbia would expect funding or financial guarantees if it joins the project.

The offer of help from Gazprom in expanding the domestic Serbian gas pipeline network seems to be firm, and would presumably involve the provision of some Russian financial support, but with the aim of clawing this back in the medium term through increased tariffs. By contrast, Gazprom is being completely non-committal on the question of Serbian involvement in TurkStream, which would probably involve a greater long-term financial commitment from Gazprom.

Gazprom's overall strategy involves an attempt to counter the challenge of North American shale gas and to diversify its gas export routes, as a recent agreement to resume gas supply to Azerbaijan also showed. However, Gazprom is already heavily committed, not just to TurkStream but also to the NorthStream and Power of Siberia pipeline projects. In seeking to implement these projects Gazprom is severely hampered by Western sanctions, which have sharply cut the Russian company's access to foreign funding. It is thus unlikely that Gazprom will be prepared to commit large sums of money to Serbia or that it will invite Serbia to join the TurkStream project.

Data provided by: