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Serbia vs Gazprom: the Deal on NIS is Still not Finalised

08 December 2008 , 06:49Ksenia Kochneva813
"We will sign all three agreements by the end of the year," Gazprom CEO Alexei Miller said after meeting Serbian President Boris Tadic.

Serbian officials agreed in January to give Gazprom's oil arm, Gazprom Neft, control of a majority stake in oil monopoly NIS in exchange for Serbia's inclusion in the South Stream pipeline.

The pipeline will open by the end of 2015, and perhaps earlier, according to the deal that will be signed in the coming weeks, Miller told reporters in Belgrade.

"It will be by Dec. 31, 2015, not later. The project could be completed before that," Miller said, adding that he did not know where and when the deals would be signed.

Asked why the Serbian and Russia sides were still unable to conclude the high-profile agreements, Miller said, "There are some technical questions but no principal issues.

Local media has reported that Belgrade made the sale of NIS conditional on the construction of the South Stream pipeline, saying it would allow Russian control of a majority NIS stake only when the construction of South Stream begins.

Gazprom Neft has agreed to pay 400 million euros ($507.6 million) for a 51 percent stake in NIS and pledged an additional 500 million euros of investment by 2012.

Analysts have said the deal was largely politically motivated. Russia was Serbia's main ally in its unsuccessful bid to block independence for its former province of Kosovo, which declared independence in February.

Serbia's Economy Minister Mladjan Dinkic, a deputy prime minister, has said the price for NIS was insultingly low, but the parliament ratified the agreement anyway in September.

NIS is the last of the state-owned oil companies in the Balkans to be sold.

It was given a monopoly on processing oil derivatives until 2010 so that it could recover after its refineries were heavily damaged in bombing in 1999.

Milan Prokopijevic of the Free Market Center said it would have been best to float shares of NIS and then sell the stake in the company on the market.

"It is difficult to say what would be the best price for NIS. Because of the global financial crisis, the price that could be achieved now would be much lower than the one agreed with Gazprom," he said.

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