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Russian gas giant Gazprom may take a stake in Serbian petrochemicals company HIP-Petrohemija in return for writing off Serbia’s outstanding natural gas debts. 

Serbian Foreign Minister Ivica Dacic said during a visit to Moscow on October 7 that the debts may be exchanged for a stake in Petrohemija. He did not specify how large the stake would be. 

"We talked today and agreed to repay the debt with the property, specifically the Petrohemija company,” Dacic told journalists in Moscow, according to reports in the Serbian press.
Serbia has outstanding debts of around $180m for natural gas supplies from Russia. This includes $148m for supplies during February-March 2013 and March-April 2014, as well as $34.8m for gas supplied back in 1995-2001, according to a source quoted by ITAR-TASS

Gazprom has proposed extending the terms for its repayment scheme for the 1995-2001 supplies until the end of this year, which would mean payments of $3 per 1,000 cubic metres added to the payments Serbia is due to make for gas supplies this year. 

HIP-Petrohemija is Serbia’s largest petrochemicals company, with total capacity of more than 600,000 tonnes a year. The Pancevo-based company generates around 80% of its revenues from exports, mainly to European Union countries. 

However, the company was forced to suspend production during the global financial crisis, later restarting operations after receiving financial support from Belgrade and agreeing to reschedule its debts with oil and gas company Naftna Industrija Srbije (NIS), which is 56.15 % owned by Gazprom. In 2011, it signed a strategic cooperation deal with NIS. 

During his visit to Moscow, Dacic also asked Russia to look at alternative ways to supply gas to Serbia, as supplies to both Serbia and other East European countries via Ukraine have dropped recently. 

Serbia is planning to go ahead with construction of its section of the South Stream gas pipeline that will carry gas from Russia to Europe, bypassing Ukraine. The director of Serbian state gas company Srbijagas, Dusan Bajatovic, said on September 26 that he expects work to start in late October or early November, despite opposition from the European Union to the project.