Russian purchase of Serbian oil company in doubt

BELGRADE, Serbia—Serbia said it won't sell its energy monopoly to Russia unless it gets firm guarantees from Moscow it will build a strategic pipeline through the Balkan country.

The $13 billion South Stream natural gas pipeline to be laid under the Black Sea would carry Russian natural gas to Bulgaria and Serbia before branching out to points in Western Europe.

Moscow officials last month pledged to complete the pipeline by 2015 -- two years behind the original schedule -- despite the global financial crisis.

But Serbia's Economy Minister Mladjan Dinkic told independent B-92 TV late Sunday that those guarantees are only "verbal" and that Russia's energy monopoly Gazprom has so far refused to sign a written contract to confirm it.

Gazprom is in talks to buy Serbia's state oil company, NIS, and Dinkic warned the government would block the sale unless Moscow gives firm guarantees the pipeline would be built.

He said Gazprom plans to conduct a feasibility study by mid-2010, and that only after that analysis would the Russian company decide whether to build the South Stream pipeline.

"In that case, we have to protect Serbia's interests," Dinkic said. "If there is no pipeline, there will be no (sale) of NIS."

Analysts have questioned whether Serbia should now be selling off one of its most valuable assets without the pipeline guarantees from Moscow.

Russia has offered about $520 million for a controlling share in NIS, and another $650 million to modernize the company. But Dinkic said the offer price is only about one-fifth of the company's market value.

The South Stream would undercut an alternative project -- the Nabucco pipeline planned to carry natural gas westward from the Caucasus. That project is backed by the United States and the European Union as a way to ease Europe's energy reliance on Russia.

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