Russians Offering Serbia Gas at Three Times the Price? – “We can no longer have a price of USD 270, but there will be no dramatic increase”

Serbian President Aleksandar Vucic said recently on TV Prva that the Russians had offered Serbia gas at a calculation of 70% market price and 30% oil formula, which would amount to USD 790 per a thousand cubic meters.

This practically means that the price of gas would be three times what Serbia pays now, which is USD 270 per 1,000 cubic meters, paid 100% according to the oil formula.

– I told them that we couldn’t pay that – Vucic said and added that he had asked for a reverse calculation – “at least 30% market and 70% oil formula”.

The price in that case, he said, would be USD 510.

– However, we can’t afford even that – Vucic said and added that he was “begging Putin for an extension of the payment according to 100% oil formula, at least until the end of the heating season”.

Let us remind that, on January 1, Serbia’s ten-year agreement on the export of Russian gas expires, and Vucic’s meeting with Putin, where, among other things, gas will be discussed, is provisionally scheduled for November 25.

Until now, the general public impression was that Russia would not increase the price of gas for Serbia, which was partly down to the statements made by gas experts and officials.

For example, it has been said that the terms of the new agreement could even be more favorable than in the previous one, because larger quantities of gas will be contracted due to the accelerated gasification and industrial development and also because, since October 1, Serbia has been a transit country for Russian gas. When asked how come there’s now talk about a tripled price, the gas expert Vojislav Vuletic says that “Vucic is making this a bit too dramatic”.

– There is no reason for the price of Russian gas to dramatically increase to our detriment. It’s simple. A long-term agreement needs to be made, for 10-15 years, as Orban has done, and I don’t believe that there will be any problems – Vuletic says for eKapija.

He does point out, however, that the oil formula that has been mentioned is not always favorable, because the price of oil in the world market is increasing unevenly, which is followed by the growing price of gas.

– It is clear that the price can no longer be USD 270, because the price of oil has gone up. Oil cost 45 to 50 dollars when we had that price, and now it’s 80 to 85 dollars, so the price of gas needs to increase because it follows the price of oil – Vuletic says.

Our interviewee notes that we should wait to see what the agreement will be like on November 25 and that nothing should be projected ahead.

– I don’t believe in this story of 30% market price and 70% oil formula. These are not firm positions. He’s going there to negotiate – Vuletic says.

Regarding the tapping into the gas reserves that Vucic also mentioned on TV Prva, saying that he was “worried that we will have to tap into the reserves that we filled for the hard times”, Vuletic points out that there is no need to tap into the Banatski Dvor storage facility, because those reserves are used only when it is minus 15 degrees Celsius outside and all the thermal power plants are working.

– It’s only autumn. It might be a slip of the tongue of Vucic’s part, or a story that is supposed to be interesting – eKapija’s interviewee estimates.

According to Tanjug’s reporting of what Vucic said, the president clarified that, until the end of the year, Serbia had at its disposal six and a half million cubic meters of gas.

– For this month and a half, we have six and a half million cubic meters of gas bought for each day, and we are already spending more. We are paying USD 270 for that amount of six and a half million and that is the best price in the world – the president said.

He added that, however, in mid-December, the consumption would reach 11 million cubic meters and that it therefore remained for the market price to be paid for four and a half million, and the market price at the time the statement was made was USD 1,200.

– In order not to do so, because, in 2022, the price will drop below USD 800, or even, we hope, USD 600, we have 268 million cubic meters of gas at Banatski Dvor, the Russians have 180 million, which we could take by the end of the year, and we will need another 100 to 120 million cubic meters of gas by the end of this year – he said.

Vucic said that, due to the increased gas consumption, the country could be expected to start spending 9.5 million in the next days already.

– I worry that we will have to start spending what we worked hard to achieve, to fill the storage for the hard times, and that we will go down to 140 cubic meters – Vucic added.

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Predsedništvo Republike Srbije

president of Serbia

Banatski dvor

Aleksandar Vučić

Vojislav Vuletić

Vladimir Putin

gas

price

growth

price increase

oil formula

agreement

import

Russian gas

meeting

storage facility

storage

reserves

consumption

tapping into reserves

transit