The agreement allowing Russia's Gazprom Neft to buy a controlling stake in Serbia's NIS was signed at an official ceremony which was attended by Russian President Dmitry Medvedev.
A preliminary agreement signed in Moscow on January 25 includes the acquisition by Gazprom's oil arm Gazprom Neft of a 51% stake in state-owned Naftna Industrija Srbije (NIS) for 400 million euros, Gazprom's 500 million euro investment in a gas storage facility at Banatski Dvor in Serbia, and the construction of the Serbian segment of the South Stream pipeline.
Medvedev said the oil and gas deal with Serbia was an historic event.
"These three key projects, which we agreed and signed, are actually referred to as landmark events," Medvedev said.
Russia's investments under the oil and gas deal with Serbia will range from $1 billion to 2.5 billion, Gazprom Deputy CEO Alexander Medvedev said.
"We are looking at potential investment and the value of payment for shares. Total investment will exceed at least $1 billion under a pessimistic scenario. But optimistically, the level of modernization, the development of the South Stream gas pipeline project on the territory of Serbia may exceed $2.5 billion," he said.
Under the South Stream project, a 400-km (248-mile) leg will be built in Serbia for Russian natural gas supplies to and via the Balkans.
NIS produces around 1 million metric tons (7.3 million barrels) of crude annually, refines 7 million metric tons (51 million barrels) and has Serbia's largest network of filling stations.
Gazprom Neft, known as Sibneft before it was taken over by Gazprom in September 2005, produced 32.7 million metric tons (240 million barrels) of crude and posted a U.S. GAAP net income of $4.14 billion in 2007.