Serbia's oil firm NIS aims to expand, EU can help -CEO

Mon Apr 22, 2013 7:46pm IST

Stocks

   

* Aims for output of 5 mln tonnes oil equivalent

* Upgrading one refinery, converting another

* NIS building Serbia's first wind farm

By Barbara Lewis

BRUSSELS, April 22 (Reuters) - A deal that opens the way for Serbia to join the European Union can help to boost sales and extend the reach of its oil firm NIS, majority-owned by Russia's Gazprom Neft, its CEO said.

Serbia on Friday agreed to cede its last foothold in the former province of Kosovo and the European Commission, the EU executive, on Monday recommended talks begin on bringing Serbia into the European Union.

Historically close to Serbia, Russia and its gas giant Gazprom have difficult relations with the European Commission, whose competition regulators are investigating possible breaches of EU antitrust laws in the gas market.

But NIS CEO Kirill Kravchenko told Reuters he "stayed out of the politics" and was focused on the pragmatics of getting NIS into line with EU rules on fuel standards and low carbon energy.

"Strategically, for sure it's positive for us. We are working in EU countries. The legislation will be on one basis. It's practical. It opens the borders more and more," he said.

NIS, majority-owned by Gazprom Neft, Gazprom's oil arm, delivered a 22 percent rise in full-year net profit to 49.5 billion dinars ($593 million) through efficiency and higher output.

The Serbian government, which has a minority stake, is looking to NIS to boost the nation's export earnings. .

So far, NIS produces around 1.7 million tonnes of oil equivalent (mtoe) from fields in Serbia and has filling stations in Serbia, Bosnia and Herzegovina, Romania and Bulgaria. Production has doubled from 0.85 mtoe four years ago and NIS is aiming for 5 mtoe by 2020.

At the same time, its goal is to increase the number of fuel stations to 800 from the existing 500 in four countries - Bosnia and Herzegovina, Bulgaria, Romania and Serbia - and is considering further regional expansion.

POTENTIAL

Compared with the EU nations most affected by the debt crisis, such as Spain, and countries such as France and Germany, where new, efficient vehicles have cut fuel use, Kravchenko said the Balkan region, with an ageing transport fleet, offered potential for the refined products market.

"For us, it's a little bit easier to survive," Kravchenko said. "But we still need to adapt."

The company is investing 500 million euros ($654 million)annually, including the cost of an upgrade last year to its Pancevo refinery in Serbia, which can now produce EU-quality fuel, and has more upgrades planned.

The other NIS refinery, Novi Sad, is being converted to produce industrial lubricants, which he saw as a more attractive market, given weak fuel demand.

For Europe as a whole, Kravchenko assumes a 5 percent fall in oil use over the next 15 years.

In Brussels, debate continues this week on a proposal to enforce an emissions goal of 95 grams of CO2 per km for new EU cars from 2020 through efficiency and reduced fuel use.

The EU is also seeking to reduce emissions and improve energy security through more use of indigenous renewable supplies and it has a goal to get 20 percent of all energy from green sources, such as wind and solar, by 2020.

NIS has decided buying into renewables is the best way to comply with EU low carbon rules

On Monday, it acquired a 50 percent stake in the Serbian 102 megawatt (MW) Plandiste wind park project from the local renewable power developer Energowind.

The project will cost 160 million euros, NIS said in a statement. It said it would set aside 23.5 million euros while the remainder of funds would be secured through a loan.

($1 = 0.7644 euros) (Additional Reporting By Maja Zuvela in Sarajevo, editing by William Hardy)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

RBI Policy Review

RBI Policy Review

RBI keeps rates on hold, warns on inflation  Full Article 

Monsoon Season

Monsoon Season

India's 2014 monsoon ends with double-digit rain deficit .  Full Article 

Cleanliness Drive

Cleanliness Drive

Modi orders officials to clean loos on Gandhi's birthday.  Full Article 

Bid to Boost Trading

Bid to Boost Trading

RBI takes small steps to deepen markets.  Full Article 

Car Recall

Car Recall

Maruti Suzuki says to recall 69,555 cars.  Full Article 

China Factory Data

China Factory Data

China final HSBC PMI steady in September on stronger global demand but risks remain  Full Article 

Oil Demand

Oil Demand

India's thirst for oil grows even as China cuts back  Video 

EBay Divests PayPal

EBay Divests PayPal

EBay to spinoff PayPal in 2015  Full Article 

New 'Windows'

New 'Windows'

Microsoft names next operating system 'Windows 10'.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage