<article><p class="lead">Serbia has signed a "very favourable" three-year gas supply contract with Russian state-controlled Gazprom, Serbian president Aleksander Vucic said.</p><p>The contract is for 2.2bn m³/yr and is 100pc oil-indexed, replacing a six-month extension to its contract for 2bn m³/yr at a price of $270/'000m³, which expires on 31 May.</p><p>Serbia is still seeking an additional 800mn m³/yr of Russian gas on top of this, for a price yet to be determined. Vucic has already sent a letter to Gazprom to discuss additional quantities, the president said.</p><p>If Serbia cannot strike a deal for all the quantities it requires, it will look to secure gas ahead of the winter when it is relatively cheaper to fill storage, Vucic said. Serbia <a href="https://direct.argusmedia.com/newsandanalysis/article/2335037">recently reached an agreement with Hungary</a> to store 500mn m³ of gas in its storage facilities. </p><p>Before the talks, Vucic said he feared the formula would include 70pc indexation to the TTF, and the most optimistic scenario he envisioned was 80pc oil-indexation, with 20pc linkage to the TTF. The 100pc oil-linked formula means that Serbia will pay "by far the best price" in Europe, "10-12 times less than the others in Europe will pay", the president said. If Serbia "realises everything from the agreement with Putin, we will have a safe winter in terms of gas supply", he said. Prices are expected to be in a range of $310-$408/'000 m³, depending on the price of oil, Vucic added. </p><p>Putin and Vucic also discussed further construction of gas storage facilities in Serbia, although no additional details have emerged. According to a January 2019 agreement, <a href="https://direct.argusmedia.com/newsandanalysis/article/2274705">Gazprom and Srbijagas planned to increase the capacity</a> of the country's only storage facility, Banatski Dvor, to 750mn m³ from 450mn m³. </p><p class="bylines">By Brendan A'Hearn</p></article>
