A land swap deal floated by the two countries would allow Serbia to keep control over northern parts of Kosovo that are mainly populated by Serbs. In return, Belgrade would hand southern municipalities mainly populated by ethnic Albanians to Kosovo.
Serbian President Aleksandar Vucic pledged to continue talks with Kosovo officials to resolve differences but warned it would take a long time to reach a broad deal with Pristina that could allow both nations to move towards EU membership.
Expectations of an agreement that would involve a land swap, a proposal floated by both Belgrade and Pristina, dimmed after a face-to-face meeting between Vucic and his Kosovo counterpart, Hashim Thaci, was abruptly cancelled on Friday.
"I will do my best (to reach the agreement), but it is a long road full of thorns and problems ahead," Vucic told reporters during a visit to the Gazivoda Lake dam, control of which is a hot topic between Belgrade and Pristina.
Part of the artificial Gazivoda Lake, key for supplying water to some Kosovo municipalities including parts of Pristina, is located in Serbia, where the source of its water lies.
Belgrade and Pristina are at odds who should have control over the lake, most of which is located in the northern Kosovo region mainly populated by Serbs, and a hydroelectric power plant next to it.
"I don't think of Thaci as a friend or companion or good interlocutor and I am sure he has the same opinion about me. But we do need to talk and to try and reach the agreement," Vucic told reporters at the Gazivoda Lake in Kosovo.
The land swap deal would allow Serbia to keep control over northern parts of Kosovo that are mainly populated by Serbs. In return, Belgrade would hand southern municipalities mainly populated by ethnic Albanians to Kosovo.
Although some European Union and US officials have said they are open to the proposal, Germany and many analysts have rejected it on the grounds that it would revive old hostilities in the Balkans that erupted during ethnic wars in the 1990s.
"It is not going to be easy to reach an (final) agreement," Vucic said. "I see no possibility to implement my ideas, you saw what Angela Merkel said, you saw what Kosovo Albanians have said."
During a visit to Macedonia on Saturday, Merkel repeated her position that borders in the Balkans should not change. The deal also faces resistance from Kosovo's ruling coalition and opposition.
Serbia lost control over Kosovo in 1999 after NATO bombed to stop killing and expulsion of Albanians by Serb forces during a two-year counter insurgency war. Kosovo declared independence in 2008 and has been recognised by 100 states, including five EU members and Russia, but not by Serbia.
Normalising bilateral ties is a key condition for both nations to advance towards their eventual goal of EU membership.