Serbia Thinking of Renegotiating Energy Deal With Russia – Daily

Text of report by Serbian privately-owned tabloid Glas javnosti, on 5 April

[Report by V. Spasic: "NIS to Russians Without Gas Stations and Oil and Natural Gas Reserves"]

Belgrade — Serbian negotiators are thinking about proposing to their Russian counterparts that gas stations and sources of oil and natural gas be exempted from the purchase agreement for Naftna Industrija Srbije [NIS, Petroleum Industry of Serbia], so as to compensate for the relatively low price of 400 million euros offered by Gazprom for the entire company, which also covers its refineries. The acquisition of a 51 per cent interest in NIS by Gazpromneft, a Gazprom subsidiary, is provided for under the Agreement on Cooperation Between Russia and Serbia in the Field of Oil and Natural Gas, which also deals with the “South Stream” natural gas pipeline passing through Serbia on its way to supply Europe with Russian natural gas. The strongest criticism of that document, which was not sent to the Assembly Thursday [3 April] for ratification owing to Democratic Party [DS] opposition, has to do with the low price of only 400 million euros for NIS, plus 500 million euros in investments.

According to Serbian legal experts, the basis for separating out gas stations and Naftagas, which owns the domestic oil and natural gas fields, is the Protocol on Basic Conditions for the Purchase of 51 per cent of NIS, which states that the Russians purchase that company with its property as of 7 July 2005, but at that point that firm did not have any property, because the titleholder was the state. Accordingly, the Russian have bought only the NIS brand and business name, and not the gas stations, refineries, or sources of oil and natural gas. Insiders say that this is one of the arguments that domestic negotiators intend to use during negotiations on the sale of NIS, thereby remedying the Serbian mistakes in negotiating the Agreement. It is a fact that the price of 400 million euros for NIS, plus 500 million in investments, is not realistic, although it is acceptable if the entire package is considered. The passage of the gas pipeline through Serbia guarantees a regular supply, revenue from transit and an energy hub on our soil, completion of the Banatski Dvor natural gas storage facility, and the gasification of households and industry, which is to say investments in excess of 1.5 billion euros, as well as the construction of electric power plants. If gas stations and Naftagas were removed from the deal, the benefit for our side would be even greater, because the gas stations could possibly be sold, with Naftagas remaining under state ownership. Gazpromneft has its own reserves of petroleum and natural gas, and so it could do without Naftagas, while one solution for the gas stations would be to split them 50-50, a source from NIS explains.

Removing the gas stations and Naftagas could be a winning hand in terms of gaining all parties’ support for the Agreement, especially that of Mladjan Dinkic’s G17 Plus and Nenad Canak’s League of Vojvodina Social Democrats, who do not support it. According to unofficial reports, the DS and the DSS [Democratic Party of Serbia] support this idea, but it is uncertain when it will communicated to the Russian side — soon, or after a new government is elected.

Originally published by Glas javnosti, Belgrade, in Serbian 5 Apr 08, p9.

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