U.S. grants temporary sanctions reprieve to Russian-controlled Serbian oil firm: Belgrade

The oil and gas refinery operated by Naftna Industrija Srbije AD (NIS), a unit of Gazprom Neft PJSC, in Novi Sad, Serbia, on Monday, Aug. 29, 2022. Photographer: Oliver Bunic/Bloomberg

The United States has granted a majority-Russian-owned Serbian oil company a temporary reprieve from sanctions targeting Moscow’s invasion of Ukraine, a Serbian minister said on Wednesday.

Washington’s sanctions on the Petroleum Industry of Serbia (NIS), part of its crackdown on Russia’s energy sector, forced the shutdown in early December of Serbia’s sole oil refinery, which supplies around 80 percent of the Balkan country’s fuel needs.

The measures have hit hard in Serbia, a key Kremlin ally and one of the few European countries not to have imposed sanctions on Russia over the Ukraine war.

“NIS has obtained a licence from US OFAC (the Office of Foreign Assets Control) allowing it to continue operations until Jan. 23. This means that the Pancevo refinery will be able to resume operations after 36 days,” Serbian Energy Minister Dubravka Djedovic Handanovic said on Instagram.

After nine months of successive postponements, Washington on Oct. 9 imposed sanctions on NIS, demanding the complete exit of Russian shareholders and preventing the refinery from receiving supplies.

But talks over its potential sale have dragged on, with analysts warning that the refinery’s closure could shrink Serbia’s economic growth and threaten thousands of jobs.

“We have achieved what seemed almost impossible. We will safeguard our energy security, as we have done so far,” Handanovic, the minister, added.

Shortly before Handanovic’s announcement, President Aleksandar Vucic said on social media that he believed he could soon announce some “phenomenal political news”.

“We’ve worked hard, we’ve earned it,” Vucic added, without offering further details.

NIS is 45 per cent owned by Gazprom Neft, which has been targeted by U.S. sanctions. Its parent company, Gazprom, transferred its 11.3 per cent stake in NIS in September to another Russian firm, Intelligence.

The Serbian state holds nearly 30 per cent of NIS, with the rest owned by minority shareholders.

According to the Serbian national broadcaster RTS, Hungarian Prime Minister Viktor Orban was involved in discussions between Vucic and the U.S. State Department earlier Wednesday, while the Hungarian firm MOL is in negotiations to buy the Russian portion of NIS’s shares.