Russia's Gazprom Refuses To Sign Major Energy Deal With Serbia's Oil Monopoly NIS - Media

Under the deal Gazprom Neft, the oil arm of Gazprom, will buy 51% of NIS for 400 million euro ($521 million) and will invest a further 500 million euro in the Serbian company by 2012. The agreement includes Gazprom’s pledge to build and manage the Serbian section of 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.

The Russian side wants to sign only the document relating to the sale of NIS by the end of the year devoid of the obligations linked with the South Stream pipeline and the underground gas depot, Beta reported.

The chairman of Gazprom's managing board Alexey Miller said last week, after meeting with Serbia’s President Boris Tadic, that the Russian company will wrap up the deal with Serbia by the end of the year. He added that there was no obstacle in principle between the two sides, just some technical issues that needed to be resolved.

Last month Serbia's Interior Minister Ivica Dacic and the Russian Minister for Emergency Situations Sergei Shoigu signed a protocol in Moscow stipulating that Gazprom will honour its commitments under its deal with NIS. In October, 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 have said 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.

($=0.7673 euro)