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Gazprom considers buying into Serbian state oil monopoly NIS -1

(Adds details, background in paras 2, 4-8)

MOSCOW, October 9 (RIA Novosti) - Russian energy giant Gazprom [RTS: GAZP] said on Tuesday it is considering bidding for a stake in state-owned Serbian oil monopoly Naftna Industrija Srbije (NIS).

The issue was discussed during a visit of Gazprom's delegation to Serbia, where Gazprom CEO Alexei Miller met with Serbian President Boris Tadic and Prime Minister Vojislav Kostunica.

"Gazprom views its participation in the privatization of NIS, the development of Serbia's natural gas transportation system under the South Stream project, and increasing the capacity of underground gas storage as a single comprehensive project for supplies to the country, and transit to third countries," the Russian natural gas monopoly said in a statement.

The parties to the talks agreed that decision-making on the projects and their implementation had similar timeframes, and should be considered together.

Although the privatization of NIS has been discussed since 2005, preparations have made slow progress. The new government, which came to power in May 2007, pledged to sell NIS by the end of the year, but the tender will most likely be held in 2008.

Serbia initially planned to sell a 25% stake in NIS for $300 million and oblige the buyer to invest another $250 million in the company's development. However, some government officials insist on selling a controlling stake, in search of larger proceeds. The company's value is estimated at $1.2 billion.

The projected deal has also attracted Hungary's MOL, Austria's OMV, Poland's PKN Orlen, Greece's Hellenic Petroleum, Romania's Rompetrol and Russia's LUKoil.

In December 2006, Gazprom, the Serb government, and Serbia's state-run Srbijagas signed a memorandum of understanding expressing their interest in the construction of a new natural gas pipeline through the Balkan country's territory to ensure uninterrupted gas supplies to European countries.

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