New deal: Serbian Prime Minister Vojislav Kostunica
Serbia to tie knot with Moscow
Serbia's Prime Minister said Belgrade would accept a Russian offer of an energy pact that would link the country to the South Stream pipeline in return for Gazprom getting a stake in Serbian oil monopoly NIS.
The plan, first floated in December, has been controversial, Reuters reported. Many Serbian officials and analysts thought the original offer of $579 million by the Russian gas export monopoly was nowhere near enough for 51% of NIS.
"This is Serbia's biggest economic project, and this agreement will guarantee great economic growth," Prime Minister Vojislav Kostunica said in a statement to local media that announced the government would adopt the deal on Tuesday. "Serbia will in this way secure a stable and reliable energy supply for the coming decades."
A senior government source, speaking on condition on anonymity, told Reuters the offer price for NIS was not yet determined, and was still being negotiated.
South Stream, a joint project by Gazprom and Italy's Eni , will carry gas under the Black Sea and through Bulgaria, to eventually reach Italy.
Belgrade, which gets 90% of its gas supply from Russia, hopes having the pipeline branch into Serbian territory will mean cheaper power, resulting in faster economic growth.
But observers say the pact is largely politically motivated due to Moscow's support of Serbia over its breakaway Kosovo province. Russia is Serbia's only ally in its bid to block independence for the Albanian-majority territory.