Gazprom and Serbia in new talks on NIS

Gazprom is to hold another round of talks over purchasing of 51 per cent stake of Serbia’s NIS government oil company. A deal would give Gazprom access to the Balkans downstream market, but it comes at a cost.

In September, Russia and Serbia ratified a deal, under which Gazprom will build gas storage and pipelines in Serbia.

Most important, Gazprom may route the South Stream pipeline through the country. It would carry 30 thousand cubic meters of gas to Europe, and make Serbia the key hub for Russian gas coming under the Black Sea and through South Stream, according to Lev Snykov, from equity research at VTB Capital.

“If approved this project will be the largest in the gas transportation sphere with the Russian side alone investing over 10 Billion Euros.”

The two countries will form the 3 joint ventures on gas and oil projects in 2009.

However Vitaly Ermakov of Cambridge Energy Research Associates says Serbia is ready to give away its stake in NIS only for guarantees that will Russian gas cross Serbian territory.

“This is going through different revisions. The Serbian side wants commitments from Gazprom on the construction of South Stream and Gazprom is going to take a long hard look at whether it has funds and if there is demand to justify the investment.”

Analyst say a deal is unlikely this year.  When signed, it will symbolize Gazprom's commitment to the South Stream project despite the current turmoil and its readiness to give up Ukraine as a gas transit country.

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