he EBRD Board of Directors has approved a €150 million sovereign loan to Serbijagas, a state-owned Serbian company responsible for the transmission, storage, distribution and trade of natural gas, to finance the upgrade of the country’s gas transmission network and the construction of a new gas storage facility.

The construction of the underground facility will ensure the enhanced stability of gas supply, helping the country and the region to become more resilient against disruptions and the impact of seasonal consumption swings. The gas storage facility will be located at one of the Itebej gas fields, in northern Serbia, and will have a capacity of up to one billion cubic meters. It will be used for both strategic and commercial purposes, with Srbijagas as the sole operator.

As part of the project, the EBRD will also finance the rehabilitation of 40 per cent of Serbia’s gas distribution network. In addition, a part of the EBRD funds will be used to refinance Srbijagas’ short-term loans, which will enable the company to improve its capital structure and free up resources for key strategic capital intensive projects aimed at connecting Serbia’s gas transmission network with those of the neighbouring countries.

This is the third gas storage project financed by the EBRD. In 2009 the Bank provided €70 million to Plinacro to acquire a gas storage facility in Croatia and €200 million to MOL for completion of the construction of an underground gas storage in Hungary. The EBRD is currently considering financing in 2010 for gas storage projects in Bulgaria and Moldova