Latest News

The future of Serbia's oil supply is unclear as US sanctions loom

Sources told AFP that Serbia has enough crude oil and fuel to meet its demand for the near future, but the U.S. Sanctions set to take effect on October 1, cast a cloud over the nation's energy security in the long term.

The Russian-owned NIS oil company said it had sufficient crude and fuel stock after Serbian president Aleksandar Vucic announced that the U.S. wouldn't extend a waiver of sanctions originally announced in January.

NIS has not disclosed inventory levels or the length of time supplies will last. Four sources with knowledge of the situation said that the refinery can operate for up to two months, and still provide enough refined products to meet demand.

Gazprom, a Russian company, owns 44.9% of NIS. A Gazprom investment unit has 11.3% and the Serbian Government 29.9%.

Uncertainty about long-term energy security

NIS is Serbia's sole oil refinery, and it supplies around 80% or more of the country's gasoline and diesel, as well as 90% of its jet fuel and heavy oil demand.

The U.S. announced sanctions against Russia's oil industry on January 10, but they had been repeatedly delayed.

Foreign banks could stop dealing with NIS once they become enforced. This would leave domestic banks without the necessary capacity.

According to a Serbian fuel industry insider who requested anonymity, "Authorities must immediately ensure NIS access to domestic financial market and then, within the next two months, do whatever is necessary to keep Pancevo refinery operating."

There is no other alternative to the refinery for the market supply.

NIS is owned by Russia's Gazprom, Gazprom Neft and Gazprom.

In an earlier report, it was reported that NIS struggled to find oil traders in other countries, and its former clients sought alternative fuel suppliers at home due to the impending sanctions.

JANAF PIPELINE AFFECT

The crude oil for NIS' Pancevo refinery, which has a capacity of 4.8 million tons/year, is transported via Croatia's JANAF pipe.

JANAF confirmed Friday that it will have to stop supplying NIS once the sanctions come into effect. However, they will ask the U.S. Office of Foreign Assets Control to extend their licence.

Vladislav Veselica is a JANAF member who said that NIS must now provide evidence for why the license should be extended.

He said that the lawyers of the company in the U.S. will file for an extension on Friday. NIS represents more than 30% JANAF revenue. Reporting by Ivana Skularac, Robert Harvey and Edward McAllister Editing by Gareth Jones and Edward McAllister

(source: Reuters)