US Sanctions Hit Serbian Oil Company NIS Despite Waivers

US Sanctions Hit Serbian Oil Company NIS Despite Waivers

Serbian oil company NIS is facing challenges in procuring oil from international traders as former clients within the country seek alternative fuel sources due to impending U.S. sanctions, sources familiar with the situation informed Reuters.NIS is primarily owned by Russia's Gazprom Neft, making it one of the last significant Russian oil assets in Europe. Its operations are vital for Serbia's energy security, as it runs the only oil refinery in the country.The company’s dominance in the Serbian market complicates efforts for other firms to pivot away from NIS, especially given the logistical issues presented by Serbia's landlocked geography.According to one trader, NIS accounts for approximately 80% of Serbia's gasoline and diesel supply and over 90% of jet fuel and heavy fuel oil.The current difficulties faced by NIS foreshadow potential consequences if U.S. sanctions are fully implemented. Serbian President Aleksandar Vucic has cautioned that the country might lose access to oil imports.

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On January 10, the U.S. Treasury's Office of Foreign Assets Control designated NIS AD Novi Sad as a sanctioned entity, initially giving Gazprom Neft 45 days to divest its investment, which has since been extended through consecutive 30-day waivers.Typically engaged in long-term crude contracts, NIS has canceled its 2025 tender, opting instead for shorter-term purchases in the spot market from international trading firms that are still willing to cooperate, according to two sources cited by Reuters. These changes in crude procurement had not been previously reported.NIS announced that it recently secured a deal for oil under the waiver and is sourcing crude from various suppliers, but provided no further details. "The company is adapting its business activities to the newly arisen circumstances," it told Reuters.Crude imports via Croatia's Omisalj port, the primary entry point for NIS’s crude supply through the Janaf pipeline, have averaged about 28,000 barrels per day this year, as reported by Kpler, a global real-time data analytics provider. This figure is down from 40,000 bpd in 2024 and 70,000 bpd in 2023.

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In light of the sanctions, fuel suppliers OMV from Austria and Greek-owned Eko have started importing essential transport fuels for their Serbian retail networks instead of sourcing them from NIS, as they confirmed to Reuters. This shift has not been previously disclosed.OMV is bringing in fuel by Danube river barges from its other European refineries, while Eko is supplying products from Greece, according to a company official who requested anonymity. Both companies have halted fuel purchases from NIS due to the U.S. sanctions.Imports alone may struggle to meet Serbia's diesel demand of 44,000-49,000 bpd and gasoline consumption of 14,000 bpd, given the limited capacity and infrastructure for barges, railcars, and trucks, noted a Serbian fuel trader.NIS stated that it is "prepared to fulfill all contractual obligations, including those with corporate clients and major buyers such as other oil companies," and emphasized that its Pancevo oil refinery is operating normally.

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