Gazprom Signs Serbian Refinery Deal

APGazprom chief Alexei Miller, Alexander Medvedev and Sechin attending the signing ceremony for the NIS deal.
Gazprom sealed the purchase of 51 percent of Serbian oil refiner Naftna Industrija Srbije and signed accords on the terms for a gas pipeline to Europe via the Balkan country.

Alexander Dyukov, the chief executive of Gazprom Neft, signed the agreement on Wednesday to acquire 51 percent of NIS with Serbian Energy Minister Petar Skundric in Moscow. President Dmitry Medvedev and his Serbian counterpart, Boris Tadic, attended the ceremony.

Gazprom will pay 400 million euros ($562 million) for the stake and invest 550 million euros more in the Serbian oil industry, Serbian officials said. Total investment in Serbia, including modernization, developing the South Stream pipeline and underground storage, will come to at least $1 billion, Gazprom deputy chief executive Alexander Medvedev said.

Investment "may exceed $2.5 billion, if we are optimistic," Alexander Medvedev, who heads Gazprom's export division, told reporters. "If we are pessimistic, the potential investment will exceed $1 billion."

Dyukov said Gazprom Neft would need to seek approval of Serbia's anti-monopoly agency for the deal, Interfax reported. He said the agency had 130 days to consider the request, meaning the deal would be completed by May.

While the deal was welcomed in the Kremlin, it has divided lawmakers in Serbia, even triggering the resignation of Economy Minister Mladjan Dinkic.

Critics say Russia has given no firm guarantees that it will build the pipeline by 2015. The $13 billion pipeline under the Black Sea would carry Russian gas to Bulgaria and Serbia before branching out to points in Western Europe.

Dinkic and other pro-Western politicians fear that Russia's takeover of Serbia's energy sector will dramatically increase Moscow's political influence in the small country.

Russia and Serbia will also examine cooperation in electricity and nuclear energy, Deputy Prime Minister Igor Sechin said at the ceremony.

(Bloomberg, AP)