Serbia's NIS to take regional energy lead

by Aleksandar Vasovic

Serbian oil monopoly Naftna Industrija Srbije (NIS), majority held by Russia's Gazprom Neft, is planning to take the lead in regional fuel production and exports, a top company official said.
"As of 2012, production will be expanding," Kiril Kravchenko, a Gazprom Neft-appointed CEO of the NIS, said. "We will have 50 % of our production slated for exports... we will try to make Serbia a base for exports to the region and elsewhere."

In February, Gazprom Neft paid EUR 400 mm ($ 529.4 mm) for a 51 % stake in NIS and pledged additional investment of EUR 547 mm, as part of a wider energy deal between Serbia and Russia. NIS holds a monopoly on crude oil processing in Serbia and it owns the country's only two refineries.
Kravchenko said the new company's leadership "will be seeking diversification of Serbia's crude oil supplies".

NIS and the government are said to negotiate the rise of fuel prices this month. Earlier, NIS invited bids for the purchase of processing machinery for the Pancevo plant, its first investment after the takeover by Gazprom Neft.
The company would not immediately invest in the other refinery in Novi Sad which had newer technology, Kravchenko said.

The Russian company was also considering whether it should buy a controlling stake in the Petrohemija chemical plant which is a part of Serbia's oil industry to settle a $ 70 mm NIS debt or "seek other ways of debt restructuring".
"Petrohemija facility is (technologically) linked with the Pancevo oil refinery... we have to discuss this with the Serbian side," Kravcenko said.

The NIS envisions 2008 unaudited revenues of about dinars 3 bn (EUR 3.2 mm) while audited figures will be announced on June 1. Under a bilateral energy deal in December, Serbia and Russia also agreed to develop part of the South Stream pipeline to transport natural gas via Turkey, Bulgaria, Serbia and then on to European markets, bypassing Ukraine.
Like other European countries reliant on Russian gas deliveries, Serbia was also hit hard during the January gas row between Ukraine and Russia and the pipeline is expected to help Serbia diversify its gas supplies.