OAO Gazprom Neft, the majority owner of Serbia’s dominant oil company Naftna Industrija Srbije AD (NIIS), will start building the Serbian section of its South Stream gas pipeline by December.

The construction of the 411-kilometer (255 miles) pipeline will cost 1.9 billion euros ($2.32 billion), Serbian President Tomislav Nikolic’s press office said in an e-mail today after a meeting with a Russian business delegation led by Dmitry Malyshev, an adviser to GazpromNeft’s general manager.

Serbia is seeking to diversify its gas imports which currently come from Russia through Hungary and Ukraine to be less vulnerable to delivery disruptions.

Last October, state-owned gas company Srbijagas said the cost to build the Serbian section would be 1.38 billion euros, with an annual transit capacity of 34 billion square meters.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net