Strategic Balkan - Challenges of Balkan's Powder Keg

The South Stream and Energy Security in South East Europe Part II

January 17, 2014

NIS - Building a Giant in South East Europe Formula for success: rise early, work hard, strike oil. J. Paul Getty The Oil and petroleum product Trading Company was founded on 1947. The establishment of the Oil and Gas Exploration and Production Company, the predecessor of today’s NIS, was in many ways significant for Serbia half a century. Through the nationalisation and acquisition of existing small-scale petroleum storage facilities and the construction of new ones, a network of storage facilities was created. This prepared the grounds for a future distribution network. The Oil Exploration and production Company was founded in 1949. with aim to discover the “black gold” in the eastern part of the Pannonian Basin.The establishment of the Oil and Gas Exploration and Production Company, the predecessor of today’s NIS, was in many ways significant for Serbia half a century ago, especially since Serbia was at that time underdeveloped and still almost completely destroyed from by the war. The first natural gas reservoir was discovered in Serbia five months after the Company’s establishment.The first oil field was discovered in the North of the country - near Jermenovci in the Banat district at 1952 - close to a gas reservoir. Even though this is not a large field, it has been pivotal for the development of the entire oil industry in Serbia. The construction of the first main gas pipeline connecting all oil fields with the City of Pančevo, where the first refinery was to be constructed, was completed at 1963. The first two decades were marked with the construction of primary refining plants. The secondary plants were built during the second period lasting from 1980 to 1992 for the purpose of deep crude oil processing. In terms of their technological capacity, the refineries were at the world’s top at that time.The Serbian oil industry soon became one of the pillars of both economic and social development. The fact that the companies from this area of business operations were at the top among the largest companies, not only in Serbia but in Yugoslavia as well, testifies to this.  Velebit oil reservoir, the country’s largest reservoir, was discovered at 1968, suitable for the production of naphthenic base oils which are highly appreciated, because they are deficient in Europe and huge volumes are imported from the USA and Asia.  Oil exploitation commenced in Angola in 1985 was the first time the Company entered in a concession agreement in a foreign country. The public enterprise “Naftna Industrija Srbije” was established in 1991. All the companies in the oil industry which had operated independently to that point were now united into a single company for the first time. Some production companies were destroyed, most of the damage having been caused to the refineries in Novi Sad and Pančevo during the NATO 1999 bombing campaign.  The Russian company “Gazprom Neft” became the Company’s shareholder, pursuant to the interstate Sales Agreement between the Republic of Serbia and the Russian Federation on purchasing 51% of the shares.Since 2010, NIS has been dynamically expanding its business activities into the Balkan markets. Subsidiaries were started in Bosnia and Herzegovina, Bulgaria, Hungary, and Romania. To support Serbia’s European integration, a Company representative office was opened in Brussels. NIS has representative offices in Russia and Croatia as well, and has also been doing business in the territory of Angola and Turkmenistan. By opening two new bunkering stations for ships on the Danube, NIS launched a new business activity – a secure supply of domestic and foreign ships and shipping companies with top quality fuel at important waterways in Serbia. A ceremonial opening of the first GAZPROM premium brand petrol station in Belgrade was held at 2012. This retail network started to expand rapidly in the region as well, namely in Bosnia and Herzegovina, Bulgaria and Romania. At 2013 NIS has started the construction of the first wind farm. With a capacity of 102 MW and consisting of 34 wind turbines, this will be the first project of its kind in Serbia. Thanks to their rich and multidisciplinary experience in the realisation of projects, Gazprom Neft experts were permanent interlocutors for NIS colleagues in the process of making strategic and tactical decisions regarding the further development of the Serbian company. This aspect of mutual cooperation takes one of the most important places in today’s communication between NIS and Gazprom Neft. The NIS Board of Directors adopted a long-term NIS Development Strategy for the Balkans by 2020 for the first time in the Company’s history. The Company’s main strategic goal by 2020 is to become the most efficient, fastest-growing energy company in the Balkans, maintaining its leadership position on the Serbian market and becoming one of the top three companies in the Southeaster Europe. 

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