Serbia to respect energy deal with Russia

23/09/2008

The Serbian government assured a visiting Russian delegation on Monday that Belgrade will honour the oil and gas commitments the country has made with Moscow.

(AP, UPI, Beta, B92, EMportal, Serbian Government - 22/09/08; B92 -- 18/09/08 - 20/09/08)

Russian Emergency Situations Minister Sergei Shoigu "expressed confidence" that the remaining details of the energy accord will be hammered out "within 60 days" from the formation of the two governments' negotiating teams. [Getty Images]

Serbia assured Russia on Monday (September 22nd) that it will honour its commitments under a key energy co-operation deal between the two countries.

"The Serbian government is determined to make both sides satisfied with the oil and gas agreement," said a statement, issued after Serbian Prime Minister Mirko Cvetkovic's talks with Russian Minister of Emergency Situations Sergei Shoigu in Belgrade.

The accord, providing inter alia for Serbia's inclusion in the South Stream natural gas pipeline project, was signed in Moscow in January and was ratified by the Serbian Parliament earlier this month.

Under the deal, Russian energy giant Gazprom is to pay 400m euros for a 51% majority stake in Serbia's Naftna Industrija Srbije (NIS) oil monopoly and spend an additional 500m euros in investment until 2012.

This aspect of the agreement, signed less than two months before the collapse of former Prime Minister Vojislav Kostunica's government on March 8th, prompted criticism from experts and politicians. They insisted that the price the Russians offered to pay for NIS ran well below the company's market value.

"I'm sure that we would get five to eight times more for NIS if it was sold through international bidding," former and incumbent Economy Minister Mladjan Dinkic said ahead of the signing of the agreement. A recent evaluation by Deloitte & Touche auditors set the price tag for 100% of NIS at 2.2 billion euros.

In July, the Liberal Democratic Party and the League of Vojvodina Social-Democrats filed amendments to the energy accord with Russia, but they were rejected by a parliamentary committee and the deal was eventually ratified without any changes.

Dinkic, who heads the government team for talks with the Russians and who attended Cvetkovic's meeting with Shoigu on Monday, has said he would try to negotiate a higher price for NIS before the agreement is fully implemented.

Describing the energy deal as Moscow's biggest investment in the Balkans, the Russian minister made it clear that his country has no wish for new talks on the issue.

"We cannot separately value any part of the agreement," the AP quoted Shoigu as saying at a press conference during a visit to the southern town of Nis later Monday. "That would entail re-valuing the entire agreement."

Responding to a question whether Russia had ever bought any other oil company for a lower price, the Russian minister said, "OK, don't sell if it's too cheap, you estimated, you gave a price and we said that we accept".

Serbian news agency Beta quoted Interior Minister Ivica Dacic as saying Monday that the government had confirmed that making changes to an agreement, which has already been ratified is impossible and that Serbia must respect the commitments it has made.

Shoigu also told reporters that talks on all technical aspects of the energy agreement will be completed within 60 days following the formation of the two governments' negotiating teams.

"I hope that work will begin on day 61," he said.

The issues the negotiating teams will discuss are expected to include the amount of natural gas that will be transited through the Serbian section of the South Stream gas pipeline, the amounts to be supplied to Serbia, as well as the operation of a joint gas company that is due to be created.

"Cvetkovic expressed gratitude to Russia's principled policy and its support concerning Kosovo-Metohija and the preservation of Serbia's territorial integrity and sovereignty," the statement issued by the Serbian government after Monday's talks said.