Serbia and Hungary Set Up Joint Natural Gas Company

Serbia and Hungary Set Up Joint Natural Gas Company

State-owned firms from Serbia and Hungary signed a deal to establish a new joint company for natural gas trading as the two countries’ strongman leaders hailed their thriving relationship.

Serbian Prime Minister Ana Brnabic (left), Serbian President Aleksandar Vucic, Hungarian President Katalin Novak and Hungarian Prime Minister Viktor Orban (right) meet at Lake Palic, Serbia on Tuesday. Photo: Instagram/@buducnostsrbijeav

The head of Serbian state-owned company Srbijagas, Dusan Bajatovic, and the head of Hungary’s MVM CEEnergy Laszlo, Zoltan Fritsch, signed a contract on Tuesday to establish a new joint gas company, SERBHUNGAS.

The signing came after the first meeting of the two countries’ Strategic Cooperation Council at Lake Palic in northern Serbia, and caused Hungarian Prime Minister Viktor Orban and Serbian President Aleksandar Vucic to praise their evolving mutual cooperation.

The new SERBHUNGAS company will be based in the northern Serbian city of Novi Sad and will be involved in gas trading, but more details have not been made public yet.

After the signing ceremony, Vucic told media that the two countries also agreed on “how and in what way to build an oil pipeline between Novi Sad and Hungary as quickly as possible, [and] how to trade gas together with MVM, to achieve better prices and better success for our companies”.

“When we join these two countries in strategic cooperation, we will have enormous energy at our disposal, which we can invest in the interest of improving the position of our peoples,” Orban said.

Hungarian Foreign Minister Peter Szijjarto also hailed the thriving relationship between the two countries.

“Cooperation between Hungary and Serbia has never been so good as today. And everyone benefits from it: Hungary, Serbia, the Hungarians living in Vojvodina [in northern Serbia] and the Serbs living in Hungary,” Szijjarto wrote on Facebook.

Szijjarto also said that establishing the joint natural gas trading company between MVM and Srbijagas and building a crude oil pipeline connecting the two countries is part of Hungary’s energy diversification strategy.

Hungarian Prime Minister Orban with Serbian President Vucic on Tuesday. Photo: Instagram/@buducnostsrbijeav

The head of Srbijagas, Dusan Bajatovic, told Pink TV in April that establishing the joint company would be “part of an agreement to work together in the region”.

Serbia and Hungary also agreed in May 2022 that Hungary will allow Serbia to store natural gas in its gas storage facilities for next winter.

Russia remains the main supplier of natural gas to both Serbia and Hungary. Serbia renewed its contract with Russia in May 2022 for the next three years. Hungary signed a 15-year contract in 2021 and in August 2022 agreed to buy an additional 5.8 million cubic metres of Russian gas a day.

Hungary’s MVM Group already operates in Serbia, and at the end of May, energy experts and opposition politicians accused the government of preparing to hand over control of the country’s hydropower riches to Hungary under an deal that they claim is the latest worrying example of the burgeoning business ties between Vucic and Orban.

Before arriving Serbia, Orban visited Albania and Montenegro last week and is due to visit to Bosnia and Herzegovina on Thursday.

As well as setting up the new joint gas company and holding the inaugural meeting of their Strategic Cooperation Council, Hungary and Serbia signed dozens of other agreements in spheres such as infrastructure, agriculture and foreign relations.

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