Energy deal with Russia to be signed Jan. 25

This will secure supplies of oil and gas for the next generation. The Russians have rebuilt their economy on sound foundation of capital revenues not borrowed debt and capital that never existed as opposed to the US who are now in economic dulldrums and potential recession having lived way beyond their means and must now reign in.

Serbia should look more east for its future partners - both China and Russia have real money to invest in the future of Serbia and the US and the West of Europe is suffering a credit crunch that is still unfolding and will leave little capacity for investment in the next few years.

Excellent!!!

Princip is dead on! Why should Serbia latch on to countries in decline instead of countries on the way up? Let the Albanians tie themselves up to the house of cards that is the US. This deal with Russia will build a solid foundation for the Serbian economy, don't get caught in the debt economy of the West, the borrower is the slave of the lender! A bright future awaits you Serbia, if you continue to make wise decisions like this one!

The real money lies east-the four largest FE reserves are held by RF, China, India and Japan. Need one say more.
Old Europe and US have the technology (in some areas) but investments?

If there was a formal auction, there would be more $. All said and done though, this is a good thing. Energy supplies at good prices are secure, jobs and investment flowing in.

Princip -
Don't forget India. Another massive country/economy which is starting to do deals with Serbia.

Air India was supposed to be interested in buying JAT. It's always good to have another interested buyer(s) bidding instead of just giving everything to the Russians.

Wow, a lot of fantasy here.

I hate to rain on the parade, but reality check: this is a no-bid deal to Gazprom. NIS has been valued at $2.8 billion. Four companies (MOL, OMV, Lukoil and Hellenic Petroleum) were willing to bid with a minimum of $2.1 billion, so obviously it's worth at least that much. Gazprom is paying... $0.4 billion plus the promise of $0.5 billion investment.

In other words, the Serbian government is giving Gazprom a $2 billion windfall. I have trouble seeing how that makes sense.

Russia vs. US: the US is a minor investor in Serbia. The correct comparison is Russia vs. the EU. The EU accounts for over 80% of Serbia's foreign trade and more than half its foreign investment, and it has an economy almost ten times the size of Russia. So it's not clear to me how turning towards Russia is "better".

Note also that OMV, MOL, etc. were clearly willing to invest much more than Gazprom.

Oh, and: Gazprom has placed a number of special conditions on the deal, including no compliance with EU regulations until 2013, and no sale of minority shares. Dinkic's original plan would have given some shares to Serbian citizens, and sold others on the open market. Gazprom hates having minority shareholders -- they ask too many questions -- so that won't happen. Sorry, citizens of Serbia: you will have no say in your energy future.

Overall, selling the largest national asset for $0.4 billion when it's worth around $2.8 billion does not strike me as a very wise decision. I realize there's a lot of sentimental attraction to Russia, especially with the Kosovo situation, but still. Economy Minister Dinkic called this deal "humiliating", and from what I can see he's exactly right.

There's some more discussion over at the Fistful of Euros today: www.fistfulofeuros.org, front page.


Doug M.

Excellent!!!

This will secure supplies of oil and gas for the next generation. The Russians have rebuilt their economy on sound foundation of capital revenues not borrowed debt and capital that never existed as opposed to the US who are now in economic dulldrums and potential recession having lived way beyond their means and must now reign in.

Serbia should look more east for its future partners - both China and Russia have real money to invest in the future of Serbia and the US and the West of Europe is suffering a credit crunch that is still unfolding and will leave little capacity for investment in the next few years.

If there was a formal auction, there would be more $. All said and done though, this is a good thing. Energy supplies at good prices are secure, jobs and investment flowing in.

Princip -
Don't forget India. Another massive country/economy which is starting to do deals with Serbia.

Air India was supposed to be interested in buying JAT. It's always good to have another interested buyer(s) bidding instead of just giving everything to the Russians.

Princip is dead on! Why should Serbia latch on to countries in decline instead of countries on the way up? Let the Albanians tie themselves up to the house of cards that is the US. This deal with Russia will build a solid foundation for the Serbian economy, don't get caught in the debt economy of the West, the borrower is the slave of the lender! A bright future awaits you Serbia, if you continue to make wise decisions like this one!

The real money lies east-the four largest FE reserves are held by RF, China, India and Japan. Need one say more.
Old Europe and US have the technology (in some areas) but investments?

Wow, a lot of fantasy here.

I hate to rain on the parade, but reality check: this is a no-bid deal to Gazprom. NIS has been valued at $2.8 billion. Four companies (MOL, OMV, Lukoil and Hellenic Petroleum) were willing to bid with a minimum of $2.1 billion, so obviously it's worth at least that much. Gazprom is paying... $0.4 billion plus the promise of $0.5 billion investment.

In other words, the Serbian government is giving Gazprom a $2 billion windfall. I have trouble seeing how that makes sense.

Russia vs. US: the US is a minor investor in Serbia. The correct comparison is Russia vs. the EU. The EU accounts for over 80% of Serbia's foreign trade and more than half its foreign investment, and it has an economy almost ten times the size of Russia. So it's not clear to me how turning towards Russia is "better".

Note also that OMV, MOL, etc. were clearly willing to invest much more than Gazprom.

Oh, and: Gazprom has placed a number of special conditions on the deal, including no compliance with EU regulations until 2013, and no sale of minority shares. Dinkic's original plan would have given some shares to Serbian citizens, and sold others on the open market. Gazprom hates having minority shareholders -- they ask too many questions -- so that won't happen. Sorry, citizens of Serbia: you will have no say in your energy future.

Overall, selling the largest national asset for $0.4 billion when it's worth around $2.8 billion does not strike me as a very wise decision. I realize there's a lot of sentimental attraction to Russia, especially with the Kosovo situation, but still. Economy Minister Dinkic called this deal "humiliating", and from what I can see he's exactly right.

There's some more discussion over at the Fistful of Euros today: www.fistfulofeuros.org, front page.


Doug M.