Serbia’s sole oil refinery faces imminent shutdown due to US sanctions on its Russian owners, risking bankruptcy and fuel shortages despite government preparations.
BELGRADE: Serbia’s only oil refinery could cease operations as early as Tuesday due to US sanctions targeting its majority Russian ownership.
The Petroleum Industry of Serbia (NIS), which supplies most of the country’s fuel, has been under sanctions since October 9 as part of Washington’s crackdown on Russia’s energy sector following the 2022 invasion of Ukraine.
Energy minister Dubravka Djedovic Handanovic had previously stated the Pancevo oil refinery would operate without disruption until November 25.
The Serbian government has since stocked fuel reserves and contracted new import volumes for December in preparation for the potential shutdown.
However, economist Goran Radosavljevic warned that imports alone cannot replace the refinery’s output. “Production covered around 80% of everything, and imports were about 20%,” he told AFP.
He stressed that replacing such a large market share with imports would be difficult, adding “You can prolong the agony for a few months through additional imports, but NIS will go bankrupt if it can no longer operate.”
Serbian officials are negotiating with Moscow about selling the Russian stake, with President Aleksandar Vucic revealing three potential buyers without identifying them.
NIS has filed a new request with the US for a temporary exemption from sanctions during negotiations, though Washington has shown no movement yet.
Serbia sold a 51% stake in NIS to Gazprom and Gazprom Neft in 2008 for 400 million euros as part of a broader energy infrastructure deal that was only partially realised.
The Serbian state holds nearly 30% of NIS, with minority shareholders owning the remainder.
Serbian officials have repeatedly warned that a solution must be found, raising the possibility of a state takeover if no other option emerges.
Vucic, who maintains close ties with Moscow, has rejected seizing Russian assets and instead offered to buy the stake at above market rates if negotiations fail.
Serbia remains among the few European countries not to impose sanctions on Moscow over the war in Ukraine and relies heavily on cheap Russian gas.
Parallel talks on gas supplies are underway, with Russia offering only short-term contracts recently, a tactic Vucic said aims to dissuade Serbia from seizing NIS.
