Serbian Paper Questions Link Between Gas Pipeline, Sale of State Oil Company
Text of report by Serbian Novi Sad-based daily Dnevnik, on 22 April
[Commentary by B. Harak: "Is the European Gas Main Lowering NIS's Price!?"]
What did Russian Minister for Emergency Situations Sergey Shoygu really say during his recent visit to Belgrade? Does Russia support the idea of the agreement in the oil-and-gas-industry sector being signed when a new Serbian Assembly and government are elected, as State President Boris Tadic claims, or are the Russians very concerned about the postponement of the ratification, as Minister of Trade and Services Predrag Bubalo is informing us? How is one to explain that we simultaneously have calming tones which talk about the fact that the Russians have understanding for the current situation in Serbia and panicked warnings that Russia is a large and powerful country which cannot wait for us to work things out?
The intergovernmental agreement on energy cooperation, which was signed in Moscow on 25 January, provides for the construction of the South Stream main gas pipeline – 400 kilometres long – through our country, the takeover of Petroleum Industry of Serbia (NIS), and the modernization of its equipment and the completion of the construction of the underground storage facility for natural gas in Banatski Dvori.
The gas pipeline, worth in excess of 1bn dollars, which would extend from Bulgaria to the Croatian border, would provide a reliable and stable supply not only for Serbia but for the entire region. Since it is planned that the gas pipeline’s capacity will be 10 times greater that is needed domestically (20bn cubic meters per annum), Serbia would grow from a large-scale importer into a transit country that could earn more than 200m dollars from the exclusive transportation across its territory. This big project is just a part of the Blue Stream global energy complex that is going to connect Russia and Bulgaria across the Black Sea and whose route, with one branch across Greece and the other across Serbia, Hungary, and, most likely, Slovenia, will run to the Italian gas system and European consumers.
The goal is to provide Italian, as well as European consumers, with an additional 30bn cubic meters of gas yearly.
No one is calling the gas pipeline’s significance to Serbia into question. That is, after all, too important a matter to enable decisive political points to be gathered in advance of the imminent May elections on the basis of supporting or opposing its construction. All the more so because there is no doubt that the energy picture in Serbia is being improved by that means and that a main route is involved. If more gas is going to be let through the pipe than we need domestically and if that pipe is going to run farther in the direction of Western Europe, there can then certainly be no talk of some kind of regional branch but only of a main European route. No one has yet explained to Serbia’s citizens, however, why the takeover of NIS has been inserted into the whole arrangement. How is the sale of one of Serbia’s most important economic resources to Gazprom for 400m euros connected to the construction of the gas pipeline? Resigned Serbian Deputy Prime Minister Bozidar Djelic said on one occasion that the Russians wanted that and that 400m euros was, in fact, their offer. Does that mean that the Serbian side did not ask any questions and that it was not in a position to impose any kind of conditions? Zorana Z. Mihajlovic Milanovic, former adviser in the Serbian Government, said at one time that “linked trade,” that is to say the entry of a strategic partner from Russia into our oil sector through the back door, caused concern.
The story regarding the Russian partners’ nervousness about which Minister Bubalo has been talking in an agitated manner could also be interpreted in a different way. The gas pipeline is not more important for Serbia than for Russia, and there is thus no sense to the stories that we should have ratified the agreement for exactly that reason. The gas pipeline is more important for the Russian side, because billions of cubic meters of gas are supposed to reach Europe and its able-to-pay consumers through it. Among other things, the Russians have already gone through the process of negotiating with the Bulgarians and the Hungarians. As far as is known, they accepted the formation of joint companies for the construction and exploitation of the gas pipeline on a parity basis and they did not, as a concession for the installation of the pipe, seek majority ownership in their national oil companies at a price that would be determined by Gazpromnyeft. From Serbia, they have received majority ownership in the joint company and a majority ownership share in one of the most important national companies for 400m euros. Is such cooperativeness of the part of the Serbian side not worth one month of patience, just enough for Serbia to come out of the elections and form legitimate bodies of authority? Insisting on quick ratification plays into the hands of that political line in Serbia that represents the position of agreement or failure and that introduces direct meddling in our political life.
Originally published by Dnevnik, Novi Sad, in Serbian 22 Apr 08.
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