Russian Gazprom to buy majority stake in Serbia's NIS

Russian energy giant Gazprom is to buy a 51% stake in Serbian oil refinery NIS, and the deal is set to be signed on 25 January, B92 radio station reported, citing a cabinet meeting document as the source.


The cabinet on Tuesday adopted the text of an agreement on energy cooperation with Russia.

"Infrastructure Minister Velimir Iliæ has been authorized to sign the deal with Gazprom in Moscow on 25 Jan," B92 cited a statement from the meeting as saying.

"This is Serbia's biggest economic undertaking, and this agreement will guarantee our country's huge economic development," said Prime Minister Vojislav Ko¹tunica.

Last month, Gazprom reportedly offered EUR 400-500 m (USD 580-730 m) for a majority stake in the state-run NIS oil monopoly, via its oil arm Gazprom Neft, also pledging EUR 500 m in additional investment in the period ending in 2012.

In return, Gazprom would build a segment of its South Stream natural gas pipeline through Serbia. No firm guarantees were provided at the time, however.

The Serbian government has been looking to sell off NIS in 25% blocks through a competitive bidding process since 2005. Gazprom and LUKoil, Austria's OMV, Poland's PKN Orlen, Hungary's MOL, and Romania's Rompetrol have all been mentioned as contenders.

The Serbian government turned down the offer, saying it was not enough for a company valued at USD 2 billion, and called on Gazprom to raise its additional investments to USD 2 bn.

"As far as we are concerned, no formal agreement has been reached. We are in the process of negotiating the terms," The Moscow Times cited Natalya Vyalkina, a Gazprom Neft spokeswoman, as saying.

Under the deal, the two countries are to jointly reconstruct a Serbian underground gas storage facility, but there is no word as to how much this would cost.

Russia and Bulgaria struck a deal on the weekend and South Stream will emerge from the Black Sea on the Bulgarian coast, but its route was not clarified. South Stream going through Serbia would be beneficial for Hungary since an arm from the pipeline to the country could be expected, in theory.

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