Officials say that BELGRADE, Serbia’s only oil plant and the source of most of the country’s fuel but now subject to US sanctions because it is mostly owned by Russians, could shut down as early as Tuesday.
Sanctions have been put on the Petroleum Industry of Serbia (NIS) since last month. This is part of Washington’s crackdown on Russia’s energy industry after its invasion of Ukraine in 2022.
The long-awaited sanctions were first announced in January by former President Joe Biden. They began to be enforced on October 9, leaving Belgrade rushing to find a way to deal with an impending energy crisis.
The energy minister of Serbia, Dubravka Djedovic Handanovic, said at the end of last month that “the Pancevo oil refinery will continue to operate without interruption until November 25.”
Since then, the Serbian government has said that it has stocked up on fuel in case the power goes out and has agreed to bring in more goods in December.
To be sure, though, imports will not be enough to save NIS on their own. “Production took care of about 80% of everything, and imports took care of about 20%,” economist Goran Radosavljevic from Belgrade told AFP.
He made it clear that it would be hard to replace such a big part of the market with imports.
”You can make the pain last a few more months by bringing in more goods, but NIS will go bankrupt if it can’t keep running,” he said.
Deals and talks –
Since the Russians own most of the company, Serbian leaders had to hope that their rivals in Moscow were willing to sell.
Officials in Serbia say that talks are still going on, and President Aleksandar Vucic said that NIS could be bought by three different companies but did not name them.
Last week, NIS sent the US a new request for a brief lift on the sanctions while talks were still going on. However, Washington has not yet responded.
In 2008, Serbia sold Gazprom and Gazprom Neft a 51% stake in NIS for 400 million euros (US$462 million). This was part of a bigger deal that included building energy infrastructure, which was only partly completed.
About 30% of NIS is owned by the Serbian government, and the rest is owned by minority owners.
The Russians went into the talks with almost 45 per cent of NIS owned by Gazprom Neft and another 11.3 per cent owned by Intelligence, a sister company based in St Petersburg.
Authorities in Serbia have said many times that NIS needs to be solved, which makes a state takeover more likely if no other choice comes up.
But for Vucic, who is close to Moscow, the idea of taking a Russian asset is especially bad. So far, he has turned down the idea and instead offered to buy the stake for more than the going rate if talks failed.
Serbia is one of the few European countries that hasn’t put sanctions on Russia over the war in Ukraine. Like many other European countries, it relies on cheap gas from Russia.
Russia has only been giving short-term contracts for gas supplies in recent months, which Vucic said was an attempt to keep Serbia from taking over NIS. At the same time, talks are going on about gas supplies.
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