Russian Minister Says Serbia Will Wrap up Sale of Oil Monopoly NIS to Gazprom by Dec 20 - Serbian Govt

The cabinet said in a statement that the Serbian Minister of Internal Affairs Ivica Dacic and Shoigu signed a protocol in Moscow earlier on Tuesday stipulating that Gazprom will honour its commitments under its deal with NIS.

The protocol says that Gazprom will deliver on its pledge to build and manage the Serbian section of its multi-billion South Stream gas pipeline designed to carry Russian gas to Western Europe, and to upgrade an underground gas depot located near the northern Serbian city of Novi Sad. The pipeline is a joint project of Gazprom and Italian oil and gas company Eni.

NIS and Gazprom are expected to form a joint venture company in the first half of next year, Dacic was quoted in an earlier statement posted on the government’s website on Tuesday.

Under the deal Gazprom Neft, the oil arm of Gazprom, will buy 51% of NIS for 400 million euro ($515 million) and will invest a further 500 million euro in the Serbian company by 2012.

The protocol is calling for scrapping entry visas for Serbian citizens visiting Russia, said Dacic.

Last month, Serbia decided to delay the sale of NIS until the end of the year, as it was unclear how Gazprom would provide the 500 million euro it has pledged to invest in the Serbian company.

Serbian analysts say that Belgrade should have tried to negotiate a higher price for NIS, adding the country's political weakness and its need for support on its breakaway province of Kosovo were factors in the deal-making with its traditional ally Russia and, as a result, too low a price for NIS was agreed.

The Serbian arm of international audit and consultancy firm Deloitte said in September it has estimated the market price of NIS at 2.2 billion euro.

($=0.7771 euro)