BELGRADE Dec 29 The Serbian government said on
Saturday it would continue negotiations with Russia on a
controversial energy pact that would potentially see Serbia
included in Russia's "South Stream" gas pipeline.
Russia proposed the deal earlier this month, seeking in
return a controlling stake in Serb oil monopoly NIS. But the
proposal has drawn fire from one faction of Serbia's ruling
coalition, which argues the offer undervalues NIS.
The government said in a statement it had adopted a platform
for further negotiations with Russia. But Economy Minister
Mladjan Dinkic quit the committee working on the deal,
Belgrade's Radio B92 reported.
"The negotiations on cooperation in the energy and gas
sector with Russia will continue in order to reach an agreement
that would respect the interests of both parties," the
government said in a statement.
The special cabinet session followed angry criticism of the
proposed deal on Friday by Dinkic, who said Russia had offered
400 million euros ($588.4 million) for a 51-percent stake in
Dinkic, a pro-Western reformer, told Reuters the offer
seriously undervalued the company and was "humiliating."
Analysts believe nationalist Prime Minister Vojislav
Kostunica wants to accept the offer, to reward Russia for
backing Serbia's efforts to block the independence of its
breakaway Kosovo province by threatening to use its U.N. veto.
The partial sale of refining monopoly NIS is one of the most
eagerly anticipated privatisations in Serbia. First discussed in
2005, it has been delayed by political infighting over how
large a stake should be sold.
Belgrade initially planned to sell a 25 percent stake for
around $300 million, coupled with a requirement for the buyer to
commit to an additional $250 million investment. But some in the
government want to sell a majority stake for a better price.
Companies including MOL (MOLB.BU), OMV (OMVV.VI), Hellenic
Petroleum (HEPr.AT) and Rompetrol have expressed interest.
NIS, with an estimated total nominal value of $1.2 billion,
has Serbia's biggest retail network. But its technology is
outdated and it needs new investment to fend off competitors
once a monopoly on processing derivatives ends in 2010.
Russia's Gazprom (GAZP.MM), the world's largest gas company
and supplier of a quarter of Europe's gas, has said in the past
it might take part in the privatisation of NIS on condition it
is allowed to expand its gas business in Serbia.
But critics say the proffered arm of its South Stream
pipeline project, Russia's rival to the Nabucco pipeline scheme,
would carry less gas and make less revenue than Serbia had
initially hoped for.
(Editing by Matt Robinson and James Jukwey)