Minister slams Russian grab for Serb oil monopoly

BELGRADE (Reuters) - A Russian bid to gain control of Serbia’s NIS oil monopoly for 400 million euros ($588.4 million) is indecent and unacceptable as far as the Economy Ministry is concerned, Minister Mladjan Dinkic said on Friday.

The offer is contained in a confidential Moscow document proposing to boost ties in the energy sector and take complete control of the Serbian petrol and gas market, while promising to consider extending a gas pipeline arm through Serbia.

“The offer is humiliating,” Dinkic told Reuters. “They have offered only 400 million euros for a 51 percent stake in NIS. Their property alone is worth 800 million euros according to conservative estimates, excluding business or market share.”

“We are supposed to immediately give away the most valuable asset we have and the gas pipeline would arrive in 2013 at best,” he added. “They will determine late next year the route of the pipeline depending on market criteria. So we want an international tender to determine NIS’s market value.”

Analysts believe nationalist Prime Minister Vojislav Kostunica wants to accept the deal, to reward Russia for backing Serbia’s efforts to prevent its breakaway Kosovo province from declaring independence, by threatening to use its U.N. veto.

But his deputy Bozidar Djelic -- of the dominant pro-Western party in the ruling coalition -- said Serbia would not make any concessions to Russia in return for political support.

The government was due to hold an extraordinary session on Saturday, but Djelic said parliament would be the one to decide.


The book value of NIS is estimated to have more than doubled in 2007 to around 2.0 billion euros ($2.88 billion).

Companies including Hungary’s MOL, Poland’s PKN Orlen, Russia’s LUKOIL, as well as Romania’s Rompetrol have expressed interest in it.

The proposal by Russia’s Gazprom, the world’s number one gas company supplying a quarter of Europe’s gas, makes clear it is interested in NIS only if it is allowed to expand gas business in Serbia.

The proffered arm of its South Stream pipeline project, Russia’s rival to the Nabucco pipeline scheme, would carry less gas and make less revenue than Serbia had initially hoped for.

The Russians also want NIS to ditch plans to implement European Union environmental standards and to extend a protectionist ban on crude oil product imports until 2012.

Industry sources said Gazpromneft officials were hovering around at NIS headquarters in Novi Sad, pushing for a deal to be signed on January 18. That is two days before Serbia elects a new president, in a ballot seen as deciding if the nation sticks to its European Union membership aims or looks to Russia.

Another thorn in the eye was a plan to keep NIS beyond reach of outside investors, small or institutional, Dinkic said.

“The plan is for Gazpromneft to acquire a 51 percent stake, leaving the remaining 49 percent in the hands of the government,” Dinkic said.

Serbia’s parliament this week adopted a law allowing the release of shares in the country’s most valuable assets -- including NIS -- to some 4 million people free of charge, resulting in a windfall worth at least 1,000 euros for every Serb adult, and more for workers in state-owned firms.

“How are we going to explain to workers that they will not get their shares after all?” asked Dinkic.

Editing by Douglas Hamilton and James Jukwey