Serbian Government yesterday adopted text of the energy agreement with Russia Government stipulating sale of 51 pct of NIS shares to the Russian ‘Gasprom’ for 400 million Euros and further 500 millions in investments over the period until 2012.

Kostunica said at a press conference on the agreement, that without it Serbia would become isolated when energy is in question. He stressed that the Serbian economy and people will benefit from the agreement and that the building industry will indirectly gain benefit as well.

He said that this agreement provides Serbia with a stable and secure gas supply, and the gas pipeline which according to it, should be constructed through Serbia will be of major transit importance , making the country an important factor in energy and a regional leader in the energy sector.

The text of the agreement will be made public after it is signed in Moscow, said Kostunica. He added that negotiations on the agreement are still underway and its final version will be harmonised and signed on January 25 in Moscow.

According to Kostunica, the agreement is a framework and it is important that other associated agreements accompany it, such as the one between Gazprom and Srbijagas.

Kostunica stressed that it is important that a consensus prevailed within the Serbian government on this issue.

The agreement was supported by Government members from DS and DSS-NS coalition, while G17 Plus ministers did not attend the cession.

Minister of Energy and Mining Aleksandar Popovic said that the energy agreement between Serbia and Russia will definitely contribute to an increase of foreign direct investment in Serbia. Popovic said that Serbia’s energy security will be strengthened with this agreement as it will provide larger quantities of gas for the country.

According to Popovic, implementation of the agreement will also reduce pressure on the country’s energy system. He said that according to rough estimates, the investment value of the gas pipe line through Serbia and the underground gas storage facility in Banatski Dvor will amount to nearly €1.5 billion.

Popovic recalled that the initial offer made by the Russians was nearly €400 million for 51% of NIS stocks with an additional €500 million in investments.

As Belgrade daily “Blic” quotes, according to the agreement that Serbia Government adopted and that ‘Blic’ had insight into, 51 pct of NIS shares should belong to ‘Gaspromnjeft’ while 49 pct would remain the property of Serbia.

In a separate document –protocol, there is written that the Russians are buying the state package of shares for 400 million Euros and invest further 500 millions in the period from 2008 to 2012 for modernization of NIS production capacities.

The crucial elements of this energy package are also construction of the existing transit-main underground gas stock at Banatski Dvor and development of NIS.

The agreement shall be in force for a period of 30 years from the day of signing and shall be automatically prolonged for the following five-year periods if neither of the parties sends notice on cancellation at least six months before the expiration date.

The agreement also envisages setting up of new companies, defines share percentage,

financing, capacity (at least 10 billion cubic meters what is by four times more than theactual yearly consumption by our country), service costs (transport, stocking…), etc.

Serbian side undertakes to guarantee free transit of gas and oil.

By their latest offer Russians express readiness by ‘Gasprom’ to offer larger capacity of the gas pipeline through Serbia of 10 billion cubic meters per year. The Russian side is ready to agree with the Serbian partners the detailed plan of investments and their dynamics and further elaborate other obligations by that company including purchase of NIS shares from Serbia citizens.