This should be seen as the Kremlin further flexing its muscle toward Europe.
Gazprom set to take over Serbian oil and gas company
The European Commission is worried about energy giant Gazprom’s regional expansion because it is ready to buy a controlling stake worth a billion euros in Naftna Industrija Srbije (NIS), or the Petroleum Industry of Serbia, the largest state-owned national oil and gas company.
Experts said the deal would be closed during President Vladimir Putin’s visit to Serbia on January 18.
Other customers were deterred because of the minority stake’s $550 million price, the need for additional investment and other prohibitive barriers.
Troika Dialog analyst, Valery Nesterov, said the Serbian company now offered more attractive terms for would-be investors.
Serbian authorities decided that a strategic investor would first buy a minority stake, and that majority stakes would subsequently be sold and top managers hired.
Nesterov said Gazprom had made the most attractive offer, and one that Belgrade could not refuse because otherwise it risked losing a promising gas project.
Gazprom will pay 400 million euros for a 51% stake in NIS and will invest the remaining 600 million euros into corporate development. The energy giant also promised to assist in the construction of the 400-km South Stream gas pipeline system worth $800 million, due to pass through Serbia.
Moreover, Gazprom offered strategic partnership in building a gas reservoir in Banatski Dvor, Serbia.
Timur Khairullin, an analyst with the Antanta Capital brokerage, said politicians and corporate officials had virtually coordinated the deal, and that Serbia’s Minister of Economy and Regional Development Mladan Dinkic who had previously claimed that the NIS stake was worth 2 billion euros, would resign from a commission examining the bilateral contract.
Commenting on the European Commission’s nervous reaction, Khairullin said any company had the right to sell their assets to anyone, and that its objections seemed far-fetched.
Nesterov said Gazprom had recently eliminated gas shortages in Greece and Turkey after Iran curtailed gas exports. The company did this by pumping more gas along the Blue Stream pipeline linking Russia and Turkey via the Black Sea.
“Instead of trying to create artificial competition for Gazprom, the European Commission should adopt a more constructive stand,” Nesterov said.
Here are some things to consider:
Oil:
- 45% of EU oil imports originate from the Middle East;
- by 2030, 90% of EU oil consumption will have to be covered by imports
Gas:
- 40% of EU gas imports originate from Russia (30% Algeria, 25% Norway);
- By 2030, over 60% of EU gas imports are expected to come from Russia with overall external dependency expected to reach 80%.
Coal:
- By 2030, 66% of EU needs is expected to be covered by imports.
Russia does not need to join the EU - the EU will be at the Kremlin’s feet.
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