Economist Goran Radosavljević recently commented on the 2008 sale of the Oil Industry of Serbia (NIS) to the Russian company Gazprom Neft, suggesting that while the decision itself was not inherently bad, the failure to hold a public tender was a key mistake. Radosavljević noted that, looking back over the past 17 years, it’s easy to analyze what could have been done differently, but at the time, NIS was facing significant challenges, including financial losses.
He explained that when Gazprom Neft took over, NIS was struggling, losing about 100 million euros in 2008. Despite being the largest company in Serbia, NIS’s market position was eroding, with competitors such as OMV, Hellenic and Lukoil taking substantial market shares. NIS’s refineries were not producing high-quality products, and it was reliant on imports of Eurodiesel. The company was in such a poor state that Radosavljević emphasized that saving at least one of its refineries was the most critical action at that time.
Regarding the privatization process, Radosavljević pointed out that, while a tender was not held, the sale to Gazprom Neft wasn’t necessarily a bad deal in terms of price. Gazprom Neft purchased the company for 400 million euros and committed to investing in its refinery operations, building infrastructure, and creating the South Stream gas pipeline. However, several commitments, such as the pipeline and some storage projects, were never fully realized, and the terms of the contract, particularly regarding mineral rents, raised concerns.
He also noted that while NIS’s profitability had increased over the years, certain conditions of the original agreement, such as the lower mining rent and tax rates, were extended, which benefitted the Russian ownership. Radosavljević suggested that the state could consider taking over the Russian stake in NIS, either temporarily or permanently, to ensure stability in the sector, especially following recent U.S. sanctions that require the complete exit of Russian interests from the company.
The economist proposed that Serbia could negotiate with Gazprom Neft for a temporary takeover of ownership, given the uncertainty surrounding the war in Ukraine and the status of Russian assets. He added that while some estimates suggested the value of Gazprom Neft’s stake in NIS could be between 2.5 to 3 billion euros, others had inflated the value, pointing to ongoing global demand for Russian oil despite sanctions.
Radosavljević also raised concerns about the Serbian government’s investment in projects like Expo 2027 and a national stadium, suggesting that these may not yield a return on investment and could put a strain on the country’s finances.
In response to the U.S. sanctions on NIS, which were announced on January 11, 2025, Radosavljević emphasized that while Serbia may need to borrow to buy out the Russian share, it should avoid state intervention in the management of NIS, akin to what happened with the Electric Power Company of Serbia (EPS). He concluded that the state should carefully evaluate any further steps to preserve stability in the energy sector while managing its financial obligations.
