Serbia seen as hub for Russian gas in Europe

Serbia will become a major hub for distribution of Russian natural gas to Europe thanks to the storage and transport capacities of the planned South Stream pipeline, the general manager of Serbia' state energy company said Thursday.

Dusan Bajatovic of Srbijagas said the 470-kilometer (300-miles) stretch of the South Stream pipeline through Serbia to be built by Russia's Gazprom would have a capacity of between 36 and 41 billion cubic meters per year - four times more than when the deal was announced last year.

He said Srbijagas and Gazprom have agreed to build large gas storage facilities in the Balkan country with total capacities of up to seven billion cubic meters that would serve as distribution centers.

"That will make Serbia the regional energy leader, and we will be able to distribute the gas for Bosnia, Croatia, Macedonia, Romania and maybe Bulgaria," Bajatovic said.

Bajatovic said that Serbia will get euro500 million ($750 million) in revenue a year from the gas transit taxes to be paid by the states which purchase the Russian gas.

The announcement comes two days after the visit to Serbia by Russian President Dmitry Medvedev and the signing of an agreement between the two countries on creating joint ventures to build the Serbian arm of the South Stream and a large gas storage facility in the north of the Balkan country.

Last year, Gazprom bought Serbia's major oil and gas assets, and agreed on the path for South Stream, to be completed in 2015. The pipeline across the Balkans would avoid Ukraine, with which Russia has pricing and political disputes. It competes with a U.S. and European Union-backed proposed pipeline called Nabucco that would send Europe natural gas from Caspian Sea nations, not Russia, to diversify Europe's natural gas suppliers.

The energy deals, along with an $1-billion Russian loan to Serbia, are seen as an attempt by Moscow to bring Belgrade under its economic and political fold, amid the Balkan country's stalled negotiations on a pre-membership deal with the European Union.

The Netherlands has blocked EU's trade and aid relations with Serbia unless Belgrade surrenders Ratko Mladic, an indicted Bosnian Serb war criminal, for trial in the U.N. war crimes tribunal. Serbia says it cannot locate him.

During the visit on Tuesday, Medvedev said Russia's goal is to make Serbia "a big energy player" which will distribute Russian gas in Europe, and added that this cooperation should result in "a strategic partnership" between the two states.

Bajatovic, a ranking official of the Socialist Party which is a part of Serbia's governing coalition, said the Balkan county should not "rush" toward the EU, and suggested Russia, a traditional Slavic ally, could offer an alternative alliance.