Serbia exclusive: GazpromNeft NIS vs Serbian gov, The oil fields of Serbia dry up and profits are not shared?

28. April 2014. / News Serbia Energy

Oil deposits in Serbia will remain empty for less than ten years, domestic oil experts warn more and more loudly. The fact that the GazpromNeft who owns majority of Petroleum Industry of Serbia Ltd. (NIS) drew more than 1, 23 million tons of domestic black gold and processed it in the Refinery “Pancevo” further increases anxiety. Total, proven oil reserves in the state are estimated at 10 to 12 million tons. It remains to be seen whether Serbia will have the strength, the will and ability to supervise not only those, 30 percent of share in NIS Ltd, but also to immerse a little seriously and examine their own interests in previous privatizations.

Oil and gas production in Serbia, by the way, is based on 59 oil fields with 815 wells, at which the various exploitation methods are applied, and the only company in our country engaged in oil and gas exploration and production is NIS Ltd.

Since 2009th the Russian “Gazprom Neft” took everything in Serbia that was related to the oil exploitation and processing, production from domestic reservoirs increases from year to year. NIS, before the sale to the Russian partner, used to exploit 600,000 to 700,000 tons of crude oil annually. Better equipped and technologically far more capable Russian boss doubled domestic production for only a few years and thus secured a very easy way to acquire extra profit.

Refinery in Pancevo currently processes approximately 2, 9 million tons of oil per year, which is barely 60 percent of 4, 8 million tons of real capacity. More than sure it is that company operates with serious losses because of this inefficiency, but it seems that the current owner does not worry. And why it should? His indolence can be understood, as domestic oil sources easily solve all unprofitable and inefficient wrinkles.

In comparison, European refineries built its economy on the employment of manufacturing capacities from 85 to 90 percent .Why is not so in our, or NIS refinery, one can only assume, but logic clearly indicates that Russian partner opted for the easiest , safest and the most quick variant of investment return, which is the local oil extraction .

The value of a million tons of crude oil is about 700 MEUR, according to the current prices on the world market. It should be said that the NIS was sold to the Russian buyer for less than 500 MEUR. Since then, the new owner has raised loan of 500 MEUR for the modernization of the production facilities. From this it is clear that the total invested funds, only through the domestic oil, were returned for a little more than a year.

However, real-speaking and taking into consideration all the facts, inevitably intrudes old question – do we know what we want from Russian oil partner? Or, maybe our wishes and desires of the local area, cuts someone else? Who and how preserve the Serbia interests in NIS?

In order that image of our oil everyday life is a little brighter, it must be also said that the market troubles and constant decline in derivatives demand in our country and Europe is increasingly serious problem. When also, the market is so shallow, such as in Serbia, it is quite logical, even reasonable that the current owner thinks logically-why we need all this processing capacities when a decrease in demand is so evident.

The current owner has already impregnated its investment and it does not have much to worry about. But why the Serbian state keeps quiet- which is the Russian partner in the local oil industry?
Is it also its interest and commitment to perceive future of the national oil company and everything that goes in that part of the energy, and in this context to offer certain solutions, have negotiations with powerful giant, point him to the needs, his own interests, but also to require solutions that will satisfy both sides?

There are solutions, they are not simple and easy, but they are possible and inevitably brings us back to the connection and  coupled work model of the refinery “Pancevo” and “Petrohemija” which is in debt now and closing and sending into scraps threats it. It used to be a very powerful potential whose goods, then and now, easy has found buyers on the world market.

However, recently has appeared statement of the Chairman of “Gazprom Neft” that this company does not have the coupled model of work with petrochemical complexes in the operational plan and that they are not interested in such cooperation. Immediately after this on domestic media scene appeared the statement of a local economic expert d that nowhere in the world refinery and petro chemistry do not work coupled?

It remains to be seen whether Serbia will have the strength, the will and ability to supervise not only those, 30 percent of share in NIS Ltd, but also to immerse a little seriously and examine their own interests in previous privatizations.

Source; Serbia Energy

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