Serbia would like to secure for itself better terms under the privatisation deal for the country’s gas giant Naftna Industrija Srbije (NIS) signed with Russian gas monopoly Gazprom Neft, Prime Minister Aleksandar Vucic told a news conference on August 14.
A day earlier, Vucic said that a probe launched into the selling of NIS to Gazprom would not damage Belgrade’s relations with Moscow.
“The relevant authorities will show all that they need to show,” Vucic said, noting that Serbia has not imposed sanctions on Russia. “It seems to me that this says something about our respect,” Vucic noted, adding that he has also discussed the matter with the Russian leadership. “We have discussed some things, and the discussions about this will continue,” Vucic said.
Earlier, Serbia’s Interior Ministry said it would investigate how NIS had been privatised by Gazprom Neft five years after the government signed a 30-year energy pact with Russia that ceded control over its oil and gas market.
Interior Minister Nebojsa Stefanovic said an investigative group would be set up to study the deal’s circumstances.
On August 14, Vucic listed several issues the Serbian side is unhappy with like the profit-sharing and a lowly 3.0% mineral resource royalty fixed as part of the terms of the privatisation deal for NIS. In June, NIS said it will pay out as dividend 13.08 billion dinars (€112.7 million) from last year’s net profit of 52.3 billion dinars.
AlexeiKokin, a senior oil and gas analyst at UralSib Financial Corp, toldNew Europe on August 15 that NIS is an important asset for Gazprom Neft.
“They also produce some crude oil. The crude oil production is not very important. It’s probably 1% of total of Gazprom Neft. But the refinery has been modernised to some degree and management has improved very much,” Kokin said.
Serbia sealed the deal to sell its only refiner amid a gas dispute between Russia and Ukraine in late 2008 and early the following year. The contract was signed in Moscow by Gazprom Neft’s Director General Alexander Dyukov and the then Serbian Energy Minister Petar Skundric. Gazprom Neft owns 51% of shares. The majority stake was sold for €400 million. But Russia committed itself to invest €500 million into modernisation of an oil refinery in Panchevo near Belgrade what it did as promised.
NIS was sold as part of the Russian-Serbian intergovernmental agreement which also included the construction of the South Stream gas pipeline, which will transport Russian gas to Southern and Eastern Europe bypassing Ukraine, and an underground gas storage facility near the Banatski Dvor village in Vojvodina province. Later, Gazprom bought another 5.15% of shares from the NIS minority shareholders thus increasing its stake to 56.5%.
In 2008, the Deloitte & Touche audit company, which carried out an independent assessment of the NIS deal, considered the deal to be beneficial to Serbia. NIS was evaluated at $2.2 million.
Together with the majority stake, Gazprom Neft also inherited NIS debts worth about €1 billion. “The reason why it was cheap was that actually it was burdened with debt,” Kokin told New Europe, adding that the cost to Gazprom Neft was much higher than the cash they paid to Serbia.
“It seems it would be a rather unpleasant situation for Gazprom Neft if they had to pay up another half a billion dollars for this,” he said. “If you look at Gazprom as a whole, perhaps it wouldn’t be that important. It’s something that would definitely affect the strategy of the oil subsidiary,” Kokin added.
NIS is one of the largest vertically integrated companies in Southeast Europe. Its main activities include the exploration, production and processing of oil and gas, as well as the production and retail of a wide range of petroleum products.
http://www.neurope.eu/article/serbia-rethinks-nis-sale-gazprom