Putin meets with Tadic, Kostunica in Kremlin
to seal oil/gas deal making Serbia a major hub

MOSCOW (Itar-Tass) - Russian President Vladimir Putin met today with Serbian President Boris Tadic and Prime Minister Vojislav Kostunica in the Kremlin on Friday, to discuss the Kosovo situation and seal a gas and oil deal that would develop Serbia into a major hub for Russian gas pumped to Europe.

"The problem of Kosovo will be in the focus of attention. Moscow and Belgrade see no alternative to a negotiable solution, with the leading role played by the UN," a high-placed Kremlin official told Itar-Tass.

Tadic, who is seeking to strengthen positions in his country prior to the second round of the presidential election, which took place on Sunday, and Kostunica, will sign a major gas deal with Moscow.

Taking part in the talks are Russian First Deputy Prime Minister Dmitry Medvedev, Foreign Minister Sergei Lavrov, presidential aide Sergei Prikhodko, Minister of Industry and Energy Viktor Khristenko, Emergency Situations Minister Sergei Shoigu, Gazprom CEO Alexei Miller, and Gazpromneft director general Alexander Dyukov.

The Serbian delegation includes Foreign Minister Vuk Jeremic, Minister of Infrastructure Velimir Ilic, and Minister of Mining and Energy Alexander Popovic.

An agreement on gas and oil cooperation will be signed in the presence of the two leaders by Russian Industry and Energy Minister Viktor Khristenko and Serbian Infrastructure Minister Velimir Ilic.

The sides will also sign a protocol on the sale of 51 percent of the Serbian oil monopoly NIS to Russia’s Gazprom energy giant.

A high-ranking Kremlin official said the package of documents to be signed Friday “provide the basis for an efficient implementation of three inter-related tasks” – the construction of the Serbian section of the South Stream gas pipeline to Europe, of a major gas storage facility in the north of the country, and energy supplies to Serbia.

“The sale to Gazprom-neft of 51 percent of the biggest national Naftna Industrija Srbije Company opens prospects for the development of the company on a mutually advantageous basis and guarantees long-term and stable supplies of energy carriers to the Serbian market,” the official told Tass.

He said gas agreements mean bilateral cooperation is rising to a strategic level and signal a new stage in relations.

“Actually Serbia is becoming a central transit hub in the emerging system of Russian gas supplies to southern Europe. That would promote considerable enhancement of energy security of Serbia and the region in general,” he said.

On Tuesday Serbia agreed to the multibillion-dollar South Stream project as part of an energy deal with Russia. A majority stake in NIS will be sold to Gazprom, while Russia will build a 400-kilometer section of the South Stream in Serbia and erect a huge gas storage facility for 800 million cubic meters 60 kilometers away from Novi-Sad in the north of the country.

Serbia endorsed the deal just days after the Russian president ensured Bulgaria's support for the South Stream pipeline, which is to pump gas to Europe across the Black Sea bed.

“With this agreement, Serbia will become an energy leader and a factor in the region,” Kostunica said, adding otherwise Serbia would be "a dead end" in Europe.

The Kremlin official said investment cooperation with Serbia has been on the rise of late, and Russia’s Aeroflot airlines plans to bid for the Serbian national JAT carrier.

Russian investments into the country comprised 580 million dollars in 2000-2007. The major investor is Russia’s LUKOIL, which bought the Serbian Beopetrol Oil Company.

In the first nine months of 2007 bilateral trade amounted to 2.36 billion dollars and last year turnover is estimated at close to three billion dollars. Russian exports comprised close to two billion dollars in January-October 2007 (a 20.8% growth) and imports from Serbia accounted for 335 million dollars (a 35.2% increase).