Serbia Intensifies Oil Supply Contingency Plans Amid Looming US Sanctions on Russian-Controlled NIS

Serbia Prepares for Potential Oil Supply Disruptions

Serbia is actively preparing comprehensive contingency plans to ensure the stability of its oil supply, as the prospect of United States sanctions against the Russian-controlled Naftna Industrija Srbije (NIS) oil company becomes increasingly imminent. The Serbian Ministry of Mining and Energy has convened its standing working group on national strategy for crisis situations in the oil sector to review detailed scenarios for maintaining supply stability.

The Sanctions Threat and NIS's Critical Role

NIS, a Serbian multinational oil and gas company headquartered in Novi Sad, operates the country's sole oil refinery in Pancevo, which boasts an annual capacity of 4.8 million tons and fulfills the majority of Serbia's energy requirements. The company also manages the largest retail network in Serbia. The US Treasury's Office of Foreign Assets Control (OFAC) initially announced sanctions against NIS in January 2025, citing its majority Russian ownership as part of broader measures targeting Russia's oil sector.

The ownership structure of NIS sees Russian companies holding a significant stake: Gazprom Neft owns 44.85%, while Intelligence (controlled by Gazprom) holds 11.3%. The Serbian government retains a 29.87% share. Enforcement of these sanctions has been postponed multiple times, with at least eight waivers granted. The latest extension permits Croatian pipeline operator JANAF to continue supplying NIS until October 15, 2025. However, Serbian President Aleksandar Vučić has indicated that further postponements are unlikely, noting that the US demands the complete withdrawal of Russian capital from NIS.

Serbia's Proactive Contingency Measures

In response to the escalating situation, the Serbian government is implementing several measures to secure its energy future. Officials have emphasized that Serbia currently possesses sufficient crude oil and petroleum reserves to mitigate immediate disruptions. Contingency plans include:

• Increasing imports of crude oil and refined products.
• Expanding transport capacities and securing alternative supply routes.
• NIS submitted requests to OFAC in September to be removed from the sanctions list and to extend its existing license.
• Exploring new supply routes, such as a potential connection from Hungary via the Russian 'Druzhba' pipeline, which Hungarian Foreign Minister Péter Szijjártó stated could supply the Pančevo refinery with 4 to 5 million tons annually.

Historically, Serbia has diversified its oil imports, sourcing from countries like Iraq and Kazakhstan, and its Pancevo refinery is capable of processing various types of crude oil.

Geopolitical Context and Economic Implications

The potential enforcement of sanctions could have significant repercussions for Serbia. If sanctions are fully implemented, NIS could face severe challenges, including an inability to purchase oil, restrictions on importing crude via the JANAF pipeline from Croatia, and potential loss of access to international financial systems. This scenario could lead to disruptions in fuel supply, increased prices, and broader economic instability. While JANAF has a contract with NIS until December 2026, it would be compelled to halt supplies if sanctions are enforced.

President Vučić has acknowledged that options such as nationalizing NIS or buying out the Russian stake, estimated at approximately €700 million, are being considered, although Belgrade prefers to avoid nationalization. The US position, as articulated by Assistant Secretary of State James O'Brien, suggests that 'the only way for the risk to be zero is for the Russian ownership share to also be zero.' The Serbian government remains committed to finding a permanent and sustainable solution in cooperation with both American and Russian partners.