Bloomberg News

Gazprom CEO Is Optimistic of Serbian Energy Deal By Year-End

December 05, 2008

OAO Gazprom (GAZP) expects to agree an energy deal with Serbia, in which Russia’s natural-gas exporter acquires the state oil refiner in return for running the South Stream gas pipeline through the Balkan country, before the end of 2008.

“We have a number of unresolved issues but we hope everything will be signed by the end of the year,” Gazprom Chief Executive Officer Alexei Miller said today in Belgrade after holding talks with Serbian President Boris Tadic.

Serbia originally agreed with Russia on the sale of Naftna Industrija Srbije in January. Gazprom’s oil arm, OAO Gazprom Neft (SIBN), offered to pay 400 million euros ($507.2 million) for 51 percent of NIS and invest a further 500 million euros in Serbia’s oil industry. The sale price was subsequently reduced so that Gazprom had sufficient funds to build its South Stream pipeline through Serbia.

Last month, Serbia asked Gazprom to buy an additional 19.5 percent of NIS shares and invest a further 700 million euros in the company after completing the acquisition. The Serbian government has also requested that Russia increase South Stream’s capacity.

Both sides have reached an agreement on the “basic conditions for the development” of the pipeline and an underground gas storage in the northern town of Banatski Dvor, according to Miller.

Dusan Bajatovic, who heads the state refiner, said that Jugorosgas, a Moscow-based joint Serbian-Russian venture, will remain the sole intermediary in the gas trade between Gazprom and NIS.

The proposed South Stream pipeline is set to carry Russian gas across Serbia toward European markets. The project would secure long-term energy supplies for the Balkans and provide Serbia with transit fees.

To contact the reporter on this story: Aleksandra Nenadovic in Belgrade at

To contact the editor responsible for this story: Chris Kirkham at

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