Energyforum

In early May, the outgoing Serbian government adopted an energy agreement with Russia that would see Russia's Gazprom Neft buy a 51% stake in Serbia's state-owned oil and gas company NIS for Eur400 million ($588 million) and give Gazprom a stake in a gas storage facility in Serbia. In exchange, Serbia is to become a transit country for the South Stream gas pipeline to Europe from Russia.

In an interview with the Serbian daily Vecernje Novosti published Wednesday, Skundric said MPs "would understand why this agreement must be the priority at parliament's first session." He said the agreement was "the best strategic and development project in the next 50 years with which Serbia will be able to achieve energy stability as well as a leading position in gas economy, production of oil derivatives and a strategic partnership with Russia and the EU."

However, there remains one sticking point to the deal--the price Gazprom Neft is to pay for the 51% stake in NIS. Serbia's economy minister Mladjan Dinkic said in August the ministry had hired a consultant to evaluate the true value of NIS. Dinkic said that consultancy Deloitte & Touche would complete the NIS valuation by early September, and that the valuation would be used for negotiating the sale price of the company.

Since the deal was adopted in May, Dinkic has said the purchase price for NIS was too low. Dinkic said that according to preliminary data, NIS made record profits in the first six months of the year--50% higher than last year's total profits. "On the basis of that, NIS' annual profit is nearing Eur400 million which has been offered for 51% of the company's capital, so with two years' profits the entire company could be bought if the price from the agreement were maintained, which is rather unrealistic,"

Dinkic said earlier this month. He said the previous government agreed the sale price for NIS without having concluded an evaluation of the company's market value, adding that he hoped it would be possible to "make an arrangement that will satisfy both sides." However, Gazprom Neft has been adamant that the Eur400 million price tag should stick.

Gazprom Neft President Alexander Dyukov said July 23 that the company saw "no reason" to raise the price it has agreed to pay. NIS operates two refineries--the 100,000 b/d Pancevo plant and the 60,000 b/d Novi Sad facility. Both refineries operate below capacity because of a need for modernization, having been damaged in the NATO-led attacks against Serbia in 1999.