Russ Oil-Gas

Sep. 24, 2008 - Kommersant - The Serbian government will honor all agreements reached previously on the acquisition of NIS, Serbia’s largest oil and gas company, by Gazprom. Speculation on the collapse of the deal was laid to rest during negotiations between Russian Emergencies Minister Sergey Shoigu and the Serbian leadership on Monday. Shoigu is the cochairman of the Russian-Serbian intergovernmental commission. Sources close to the negotiations say the talks were tense. Recent rumors held that the government was dissatisfied with the sale price for Naftna Industrija Srbije. Under an agreement reached in January of this year in the presence of the presidents of both countries, Gazprom Neft will buy 51 percent of the shares in NIS for €400 million and invest at least €500 billion in its modernization by 2012. The agreement also obliges Gazprom to build a branch of the South Stream gas pipeline and an underground natural gas reservoir in Serbia. Ratification of the agreement was delayed by the governmental crisis and early elections in Serbia. At the first meeting of the new Serbian parliament in July, Prime Minister Mirko Cvetkovic declared the price for the company insufficient and the deal was not ratified. Although the parliament approved the deal on September 9, Deputy Prime Minister Mladjan Dinkic stated, however, that the price for NIS would be the subject of further negotiations. An assessment of the company by Deloitte & Touche was published this month that set the value of the company at €2.2 billion. Serbian sources say that Shoigu pointed out that the NIS deal was linked to the construction of a pipeline that Serbia has a large interest in, that Russia wrote off over €12 million in Serbian debts, provided Serbia with favorable trading conditions and helped it in the battle for Kosovo. In the end, Serbian Deputy Prime Minister Ivica Dicic, who negotiated with Shoigu, stated, “Russia has repeatedly shown that it is our dependable ally. If anyone in Serbia doubts that, let him find us another one.”