Serbia to Finalise Russian Gas Talks

11 November 2008 Belgrade – The Serbian government will enter the final phase of talks with Russia’s oil and gas conglomerate OAO Gazprom over the sale of the country’s Naftna Industrija Srbije, NIS, oil industry and the development of a wing of the South Stream gas pipeline, a official said on Tuesday.

Dusan Mrakic a state secretary with the Mining and Energy Ministry told reporters that the deal over the sale of 51 per cent stake of NIS will be “signed by December 15 at the latest”.

Last year Serbia and Russia reached a tentative agreement by which Gazprom’s oil arm, Gazpromneft, will purchase a 51 per cent stake in NIS for €400 million and invest a additional €500 million in it by 2012.

Mrakic also said that the two sides should also agree on the creation of a joint venture between Serbia’s gas provider Srbijagas and Gazprom, development of the South Stream pipeline and about the completion of an underground gas storage in the northern town of Banatski Dvor.

Meanwhile, Belgrade’s Politika daily said that Dimitry Malishev, an advisor with Gazprom’s board of directors will visit Belgrade to finalise steps that will pave the way for the final signing of the oil and gas deal.

Earlier this month Serbian negotiators reportedly asked their Russian counterparts to extend the current November 22 deadline for signing the deal as it remains unclear whether Gazpromneft will fund the investments through a cash payment or a loan.

According to media reports the Russian side said it prefers that NIS take out a €500 million euros loan which would be supplied with Gazprom’s guarantees.

In July the Serbian government said it wanted to renegotiate the sale of NIS, arguing the proposed price was not sufficient. In August, the Deloitte & Touche auditors said that the total price of Naftna Industrija Srbije is €2.2 billion.

In his September visit to Belgrade, Sergey Shoigu, Russia’s minister for emergency situations and the key negotiator in the sale of NIS, flatly rejected Serbia’s proposal.

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