Djedovic Handanovic: We are solving NIS issue, documents and information will be available to US by May 16

Photo: Telegraf.rs

Minister of Mining and Energy Dubravka Djedovic Handanovic today spoke about the negotiations on the sale of the majority stake in NIS (Petroleum Industry of Serbia).

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She spoke during a Pupin Forum panel themed, "Serbia's strategic approach to energy diversification, including current and planned projects and wider regional energy networks".

The minister pointed out that the March round of consultations ended very well and produced significant results.

"The negotiations are intense. They are on the one hand conducted between the buyer and the seller, meaning the Russian majority owner and MOL, and Serbia and MOL, as a potential future shareholder in NIS. They are proceeding quite well and we expect, when it comes to the continuation of negotiations between Serbia and MOL, that they will continue tomorrow and the day after tomorrow, both by legal and expert teams, So, I expect that very soon we will arrive at the end of those negotiations, agree on a contract, which we expect sometime on May 15 or 16 between MOL and the majority Russian owner, and in that sense, that conditions will be created for certain information and documents to be shared with the US administration, which will later need to approve the transaction," said Djedovic Handanovic.

The Serbian minister stressed that the negotiations regarding the new ownership structure of NIS are extremely complex due to the regional importance of the company, which dominates the markets in Serbia and in the neighboring countries. She added that the state strives to increase its ownership share and strengthen its influence on key decisions, in order to correct the omissions from the 2008 contract. The goal is to secure critical energy infrastructure and greater independence from imports and external factors, while it is necessary to comply with the regulations of the US administration (OFAC).

"Of course, in that whole package, Serbia wants to improve its position, to better protect its interests, better than those we inherited by selling NIS to Gazprom Neft in 2008, above all we want to insrease the percentage of Serbian ownership in the company, to ensure better decision-making by the board of directors on some key issues, during the shareholders' meeting, because NIS is critical infrastructure to us, critical energy infrastructure, meaning something that the whole country relies on, on which we rely for our daily functioning, the economy and the citizens. During this energy crisis we can see how countries that do not have their own refineries, how dependent they are on imports, sanctions, they are more susceptible to shortages and rapid price hikes," she pointed out.

The minister added that the question of the Pancevo refinery is one of the key issues in the sense that MOL should undertake to have a certain annual level of oil processing done there.

"We have reached certain agreements on that issue. So we have come a long way in perfecting that. There are still a few additional questions, primarily commercial because we have already resolved the legal part, which concern the construction of the oil pipeline between Serbia and Hungary, but also the presence of products from the refinery on the Serbian market, where we want to ensure that the Serbian market is primarily supplied by the refinery in Pancevo. That's very important for us. It means that we can be sure that our consumers can rely on our company as they have done so far, on production of the Petroleum Industry of Serbia, but also regarding certain obligations that NIS had towards the Serbian government, above all investments, for MOL to continue or take this over, to replace it with certain other acceptable investments or some other assets that have already been built or that are already in Serbia, which are very important to us from the aspect of energy security," the minister said, and added:

"So these are, I expect by the end of this week, the commercial points of discussion which, regardless of the fact that each side is protecting its interest, our job is to reach the best possible agreement in the interest of our citizens and we will protect that position, and I expect a solution and a compromise to be reached, that is, to close all open issues already by the end of this week."

Commenting on the current negotiations in the context of new political circumstances in Hungary and the particular relationship with the Russian partners, the minister referred to the complexity of the position in which Budapest finds itself.

"I think that Hungary has strategic interest in cooperating with the Russian Federation, primarily regarding the supply of oil and gas, and in this sense the Hungarian government will look to protect the interests of its citizens. That's an important element that should be taken into account, as well as their previous good cooperation with the US administration," said Djedovic Handanovic.

She stressed that Serbia will insist on maintaining good relations with its neighbor to the north (Hungary), regardless of the process of forming a new government there.

"What we will work on is to maintain good relations with the Hungarian government and develop new strategic projects, one of which is the new oil pipeline. Also, there is the potential interstate agreement on the takeover of NIS by MOL," stated the minister, adding that she expects the Hungarian "balanced policy" to continue, which benefits its citizens.

Although each party in the negotiations is seeking its own political and economic "leverage", Djedovic Handanovic said that Serbia remains focused on defending its own energy security in the face of global upheavals.

"It's up to us to defend and preserve security of supply, especially in this extremely difficult circumstance of rising oil prices, but also possible future shortages on the European market. We still don't have those challenges, the refinery is working at full capacity and as long as that remains so, I expect we will find ways to protect the market from price surges," said the minister.

She explained that the state has chosen to bear high costs through the reduction of excise taxes and the release of diesel from mandatory reserves, in order to protect the standard of citizens, but that a precise balancing of the budget is necessary for this.

As a key pillar of stability, the minister highlighted the record energy reserves that Serbia currently has at its disposal.

"Thank God, our gas reserves are extremely high, close to 600 million cubic meters. Reserves of oil and derivatives have increased - diesel has doubled, gasoline twice in the past two or three years. This gives us the flexibility to move forward, and we can cover about three months worth of supply with commercial and operational reserves, which is extremely important in this challenging geopolitical moment," concluded Djedovic Handanovic, adding that fiscal stability and support from the IMF are key to continued structural reforms in the energy sector.

(Telegraf Biznis)