Russia’s Gazprom is going to extend a EUR 175mn loan to Serb state-owned gas firm Srbijagas in the first quarter of next year for the development of the South Stream pipeline project, the head of Srbijagas told broadcaster RTS in an interview on Nov 12.

The funds will be extended at the same terms offered by Gazprom to Bulgaria, or at a 4.25% interest, Dusan Bajatovic said. He added that at the same time Gazprom would provide another EUR 175mn to the joint company, which will run the project in Serbia.

Furthermore, by the end of this year Srbijagas will secure a EUR 75mn state-guaranteed loan and Russia will inject the same amount via a capital injection in South Stream Serbia. (It was not immediately clear who will provide the state-guaranteed loan – Bajatovic said the credit agreement is pending a government and parliament approval.)

He summarised that in February or early March 2014 the Serbian daughter company will have EUR 500mn for the South Stream section construction.

The construction of the 470-km stretch in Serbia is estimated to cost EUR 1.7bn. The pipeline will probably have separate legs to Macedonia, Bosnia and Kosovo as mentioned earlier this week during a meeting of Serb government officials with Gazprom CEO Alexey Miller in Belgrade.

Works are expected to begin on November 24. The end of construction works and the start of first gas supplies to Serbia are planned for 2016.