Serbia Seeks Another Extension of Russian Gas Deal

Serbia is seeking another extension of its gas supply arrangement with Russia as the current agreement approaches its 30 September expiry, preserving a relationship that remains central to the country's energy system even as the European Union moves to phase out Russian gas. President Aleksandar Vučić said after a one-hour telephone conversation with Vladimir Putin on 26 September that he expected the arrangement to be extended from 28 September and that Serbia would continue receiving gas at a price of €318 per 1,000 cubic metres. He compared this with a TTF market price of €868 per 1,000 cubic metres on the same day.

The expected extension would continue a pattern of short-term arrangements between Belgrade and Moscow. In March, Serbia secured another three months of Russian gas supplies after Vučić spoke with Putin, while in September the Serbian president said he hoped to conclude a new contract with Russia by the end of the month. The latest talks therefore provide continuity for Serbia's energy system, but do not yet establish the longer-term framework that Belgrade has been seeking.

Russian gas remains difficult to replace

More than 80% of Serbia's gas supplies still come from Russia, making the country one of Europe's most exposed markets to Russian gas. Belgrade has acknowledged the need to reduce that dependence and has been discussing gas purchases through EU mechanisms, while also increasing supplies from Azerbaijan. Yet the alternatives remain insufficient to replace Russian volumes quickly, leaving Serbia dependent on Moscow while it develops additional infrastructure and supply routes.

The price difference also gives Belgrade a strong economic incentive to maintain the existing arrangement. Vučić's comparison between the €318 Russian price and the €868 TTF reference price was intended to demonstrate the scale of the advantage Serbia associates with its Russian contract. At the same time, European gas prices fluctuate and the two figures do not represent identical contractual products, so the comparison is primarily an indication of the political and economic value Belgrade places on maintaining favourable Russian terms.

Serbia has nevertheless been expanding alternatives. Azerbaijani gas has become part of its diversification strategy, while connections with neighbouring markets give the country access to wider European supplies and LNG arriving through regional infrastructure. The government has also indicated that it wants to purchase increasing volumes through European mechanisms. Vučić said earlier this year that Serbia would continue receiving significant Russian volumes while taking more gas from European sources.

That approach allows Belgrade to reduce its exposure without immediately replacing Russian gas altogether. The constraint is that diversification requires pipelines, interconnectors, storage capacity and contracts with alternative suppliers. Until those elements are developed at sufficient scale, Russian gas remains difficult to remove from Serbia's energy mix without increasing costs or creating additional supply risks.

Serbia is outside the EU ban, but its energy policy is moving into a different environment

The timing of the negotiations is significant because the EU is now implementing a formal phase-out of Russian gas. EU countries adopted legislation in January 2026 to gradually prohibit Russian pipeline and LNG imports, with the final deadlines extending into 2027 depending on the type and duration of contracts. The European Commission says the policy forms part of the broader REPowerEU strategy to end dependence on Russian fossil fuels.

The EU restrictions do not directly prohibit Serbia from buying Russian gas. The EU Delegation in Serbia has stated that the phase-out applies to EU member states and does not prevent Russian gas from transiting through the EU to third countries such as Serbia. This means Belgrade can continue using Russian supplies even as the regulatory environment around those supplies changes across the EU.

For Serbia, however, the European shift still matters. The country's gas infrastructure is increasingly integrated with neighbouring EU markets, while its strategic objective remains EU membership. A European energy market progressively moving away from Russian gas could therefore make continued reliance on Moscow more difficult to sustain over the longer term, even without a direct EU ban on Serbian imports.

The result is a gradual divergence between Serbia's current energy position and the direction of the market it ultimately seeks to join. Belgrade can continue relying on Russian gas in the short term, but its long-term energy strategy increasingly depends on developing access to non-Russian supplies.

NIS puts a second energy deadline on Belgrade

The gas negotiations are unfolding alongside a separate dispute over Naftna Industrija Srbije, or NIS, Serbia's largest oil company. The company is majority-owned by Russian interests, including Gazprom Neft, and its ability to operate under a US sanctions waiver has become another major issue for the Serbian government. The current US licence and a related licence for Hungary's MOL to negotiate with Gazprom Neft are due to expire on 30 September.

The ownership issue has been under discussion for months, with Hungary's MOL involved in negotiations over the Russian stake. Belgrade is seeking a solution that would keep the company operating while addressing the sanctions problem and reducing the risks created by Russian ownership. Vučić discussed NIS directly with Putin during their latest call, but no final arrangement was announced.

The simultaneous deadlines for gas and NIS expose two different forms of energy dependence. The gas arrangement is primarily a question of maintaining supply from Russia on favourable terms, while NIS has become a question of ownership, sanctions and access to the international financial and energy system. For Belgrade, managing both issues requires maintaining relations with Moscow while also avoiding disruptions that could arise from US and European sanctions policies.

Energy remains part of Serbia's broader balancing strategy

The gas relationship also reflects Serbia's wider position between Russia and the EU. Belgrade remains committed to its EU accession process, but it has not aligned its foreign policy with the EU on sanctions against Moscow and continues to maintain close political and economic relations with Russia. Vučić's latest conversation with Putin covered bilateral relations, the Balkans and the war in Ukraine alongside the energy issues.

Energy provides Serbia with one of the clearest areas in which this balancing policy is visible. Russian gas gives Belgrade an established supply route and favourable contractual conditions, while European integration creates incentives to diversify away from Russian energy and strengthen links with the EU market. The government has therefore pursued both tracks simultaneously rather than choosing an immediate break with one side.

This strategy has allowed Serbia to increase alternative supplies while preserving Russian gas as a major component of its energy system. It also gives Belgrade more time to develop infrastructure before making a larger shift in its import structure. But as the EU's own dependence on Russian energy continues to decline, the economic and regulatory environment supporting Serbia's existing model is changing around it.

The Western Balkans face different energy starting points

Serbia's position also highlights the uneven pace of the energy transition across the Western Balkans. The region does not have a single energy policy or the same level of exposure to Russian supplies. Infrastructure, ownership structures and access to alternative sources vary significantly between countries, meaning that the reduction of Russian energy dependence is progressing at different speeds.

For Serbia, the challenge is particularly pronounced because Russian gas remains deeply embedded in the country's supply structure while Russian interests are also present in the oil sector through NIS. Diversification is therefore not simply a matter of finding another supplier. It involves expanding infrastructure, securing competitive contracts and changing ownership structures while avoiding disruptions to domestic energy markets.

The expected extension of the gas arrangement gives Belgrade additional time to manage that transition. It does not, however, change the underlying direction of Europe's energy market. The EU is building a system designed to operate with progressively less Russian gas, while Serbia continues to rely on Moscow for a large share of its supply and simultaneously seeks deeper integration with the European market.