Russian energy giant Gazprom Wednesday signed a controversial accord to take a majority stake in Serbia's oil monopoly NIS.
Russian energy giant Gazprom Wednesday signed a controversial accord to take a majority stake in Serbia's oil monopoly NIS, in a deal that strengthens Russian access to lucrative southern European energy markets. Agreements worth at least one billion dollars on the sale of a 51-percent stake in NIS to Gazprom and other deals were signed in the Kremlin following talks
between Russian President Dmitry Medvedev and Serbian counterpart Boris Tadic.
"This is the beginning of large, serious and I am certain mutually beneficial work," Medvedev said.
Tadic said the agreements had strengthened Russian-Serbian relations that "until now have been characterized by an idea of beautiful intentions" rather than actions.
The price of the 51-percent stake NIS was 400 million euros (560 million dollars), Serbian officials have said, with analysts suggesting Russia has bought the stake for a knock-down price.
Independent consultants Deloitte valued the whole company at 2.2 billion euros in September.
"Naturally, this is a political deal," said Vyacheslav Bunkov, an oil and gas analyst at Aton brokerage.
The agreement, which has provoked a rift in the Serbian government, comes as Russia continues to offer unstinting support to Belgrade over its opposition to the independence of its ethnic Albanian-majority Kosovo.
In the Kremlin, Medvedev reiterated Russia's support to Serbia, saying Moscow's position had not changed.
"We have proceeded and are still proceeding from the fact that a unilateral recognition of Kosovo has extremely negatively affected both regional and international security."
As part of a wide-ranging energy deal originally agreed in January, Serbia will allow the transit across its territory of the South Stream gas pipeline to transport Russian gas to southern Europe.
Aton's Bunkov said that under the deal Gazprom essentially had received control of "all of Serbia's oil processing and sales network."
Gazprom Neft begins its integration into Europe
"Gazprom Neft begins its integration into Europe," he added, referring to a Gazprom oil arm, which has bought the NIS stake.
As part of the deal, Russia agreed to invest 550 million euros to modernize Serbian refineries and build a gas storage facility, Serbian officials have said.
Russia and Serbia will make a final decision on investments into the storage facility by mid-2009, Gazprom said in a statement on Wednesday.
The deal was initialled on Monday after months of talks which provoked a rift in Serbia's government.
A small party from the ruling coalition pulled out of the negotiations complaining it was too favourable for the Russians and that Moscow provided no guarantees on the construction of the pipeline and storage facility.
Economy Minister Mladjan Dinkic of the neo-liberal G-17 Plus party condemned the deal in an interview with the Vreme magazine to be published Thursday, quoted by the Beta news agency
"Through the sale of NIS's property alone, in normal conditions, without the oil business and rights to the use of oil sources, we could have got at least 800 million euros (instead of the 400 mln)," he said.
Alexander Medvedev, deputy CEO of Gazprom, said in the Kremlin that the deals were worth "at least one billion dollars if you are a pessimist" and could top 2.5 billion dollars under an optimistic scenario.
He and others denied the notion that Moscow had bought the NIS stake on the cheap, saying "it looks like the Serbs have nothing to complain about."
Deputy Prime Minister Igor Sechin said that Russia considered the agreement to be a "market deal," adding that it had not revisited its parameters even after the start of the economic crisis earlier this year.
"Gazprom has signed all the three documents that essentially fold into one package cooperation in the energy sphere between Russia and Serbia," he told reporters in the Kremlin.
Medvedev and Tadic signed a joint declaration pledging to further develop a "strategic partnership" between the two countries.