Serbia’s oil and gas group NIS returned to profit in the first half of 2026, producing a sharp financial recovery even as its ownership remains unresolved and the company continues to operate under temporary relief from United States sanctions.
The group reported net profit of RSD 9.8bn, equivalent to approximately €84mn, for the six months to the end of June. Earnings before interest, tax, depreciation and amortisation rose to RSD 35.1bn, or close to €300mn, supported by higher international oil prices, lower-cost crude inventories and tighter control over expenditure.
The result represents a turnaround of RSD 13.4bn from the RSD 3.6bn net loss recorded in the first half of 2025. EBITDA more than tripled from RSD 10.2bn, while operating cash flow increased from RSD 1.7bn to RSD 16.6bn.
The scale of the improvement is important because it was achieved without a corresponding increase in physical production, refining or sales. NIS produced 554,400 tonnes of oil equivalent during the reporting period, broadly unchanged from 556,000 tonnes a year earlier. The Pančevo refinery processed approximately 1.6mn tonnes of crude oil and semi-finished products, down from 1.68mn tonnes, while petroleum-product sales declined from 1.52mn tonnes to about 1.4mn tonnes.
The financial recovery was therefore driven principally by price and inventory effects rather than volume expansion. Average Brent crude reached $92.60 a barrel during the first six months of 2026, compared with $71.70 in the corresponding period of 2025, an increase of almost 30 per cent.
For NIS, which combines domestic oil and gas production with refining, wholesale distribution and one of the region’s largest fuel-station networks, higher crude prices have a mixed effect. They support upstream earnings and increase the nominal value of refined products, but they also raise working-capital requirements and procurement costs. The decisive factor in the first half was the company’s ability to process inventories acquired at lower prices and sell the resulting products into a stronger market.
This was the reverse of the conditions experienced in the first half of 2025, when NIS was hit by falling petroleum-product prices, expensive inventories accumulated to safeguard supply, sanctions-related procurement pressure and losses at HIP Petrohemija. The petrochemical subsidiary reported a loss of RSD 4.7bn in that period, contributing materially to the group’s negative result.
The first-half 2026 numbers indicate that cost controls and inventory management have restored operating profitability, but they do not yet point to structural growth in the underlying business. Oil and gas production remained almost flat, refining volumes declined by roughly 5 per cent, and total sales fell by approximately 8 per cent. The earnings improvement is consequently exposed to a reversal in crude prices or to the processing of more expensive replacement inventories during the second half.
NIS has already warned that the positive inventory effect could unwind in the third quarter. Crude acquired at higher prices will gradually enter the refining system, compressing the margin between feedstock costs and realised product prices. The company’s second-half performance will depend on refining yields, the timing of crude purchases, regional diesel and petrol cracks, exchange-rate movements and the degree to which domestic fuel-price regulation permits international costs to be passed through to consumers.
Capital expenditure remained relatively stable despite the uncertain operating environment. NIS invested RSD 11.8bn, approximately €101mn, during the first half, compared with RSD 12.4bn a year earlier. The modest reduction suggests that management has protected essential projects while postponing or reprioritising expenditure that is less critical to production, refining reliability and regulatory compliance.
The investment level is nevertheless considerably below the group’s historical expansion requirements. The Pančevo refinery, with annual capacity of about 4.8mn tonnes, is Serbia’s only crude-oil refinery and supplies most of the domestic market. Maintaining refinery reliability, adapting crude intake to a broader range of suppliers and upgrading storage and logistics infrastructure require sustained capital commitments that cannot be indefinitely managed through short-term spending restraint.
NIS also needs investment to slow the natural decline of domestic hydrocarbon production. The group’s Serbian oil and gas fields provide a strategically important portion of its crude supply, but mature reservoirs require continuous drilling, well interventions, seismic work and enhanced recovery measures. Flat first-half production indicates that these programmes are stabilising output, although they have not yet generated material growth.
The group’s public-revenue contribution remained substantially larger than its profit and investment. NIS calculated RSD 101.4bn, or approximately €865mn, in taxes, excise duties, fees and other public obligations during the first six months. That was slightly below the RSD 104.7bn reported a year earlier but still demonstrates the company’s fiscal importance to Serbia.
This contribution explains why NIS is not merely a corporate ownership question. It is an essential component of Serbia’s energy security, tax base, industrial supply chain and inflation management. Any disruption to crude deliveries or refinery operations would affect fuel availability, transport costs, agricultural production and the government’s excise revenues.
The more immediate risk lies outside the company’s operating accounts. NIS remains exposed to US sanctions because Russian entities continue to hold a combined majority interest. Gazprom Neft owns 44.85 per cent, while a further 11.3 per cent is held through the Gazprom-controlled company Intelligence. The Serbian state owns 29.87 per cent, with the remaining shares held by employees, former employees and minority investors.
NIS has been operating under a temporary licence issued by the US Treasury’s Office of Foreign Assets Control, allowing it to continue importing crude, making payments and conducting other essential activities despite the sanctions framework. The licence in force at the time of the half-year results was due to expire on 31 July 2026, and the company had requested another extension.
The temporary authorisations have allowed Croatian pipeline operator Janaf to continue transporting crude to Serbia. NIS depends heavily on the Adriatic pipeline connection because most of the crude processed at Pančevo is imported through Croatia. A lapse in the relevant US licences could therefore create difficulties not only for NIS but also for banks, insurers, traders, shipping companies and pipeline operators involved in the supply chain.
Negotiations over the Russian shareholding have centred on Hungary’s MOL Group, which reached an agreement in principle to acquire the majority stake held by Gazprom Neft and Gazprom. Serbia has separately negotiated a shareholders’ framework with MOL and intends to increase its own interest in NIS by a further 5 percentage points, which would raise the state’s holding to almost 35 per cent.
For Belgrade, the key conditions extend beyond the purchase price. Serbia wants binding protection for the continued operation of the Pančevo refinery, preservation of domestic production capacity, secure fuel supplies and sufficient state influence over major strategic decisions. MOL, meanwhile, would gain control of a strategically located refinery and retail platform linking its existing Central European system with markets in Serbia, Bosnia and Herzegovina, Romania and Bulgaria.
NIS owns more than 400 active retail sites across the region, including more than 320 in Serbia. Its infrastructure and market position would give MOL a stronger south-eastern extension to a refining and distribution portfolio already built around Hungary, Slovakia and Croatia. The transaction would also create opportunities for more integrated crude procurement, refinery optimisation and cross-border product movements.
Yet the acquisition remains subject to regulatory approval, financing arrangements and the removal of sanctioned Russian control. Until the ownership transfer is completed, the company’s financial discipline must compensate for a risk that cannot be eliminated through operational measures alone.
The first-half results show that NIS can generate substantial cash under favourable market conditions. Operating cash flow of RSD 16.6bn covered the RSD 11.8bn investment programme by around 1.4 times, leaving a positive internal funding balance before financing costs and other obligations. EBITDA was almost three times capital expenditure, providing a meaningful buffer against short-term market volatility.
That buffer is valuable, but it should not be confused with a permanent improvement in earnings quality. A large part of the rebound came from the combination of Brent at $92.60 a barrel and the consumption of lower-cost inventories. With refining and sales volumes below their 2025 levels, the durability of the recovery will depend on the normalisation of ownership, uninterrupted access to crude and payment channels, and the restoration of a predictable multi-year capital programme.
NIS enters the second half of 2026 financially stronger than it entered the year, but still operating within a narrow political and commercial corridor. Its RSD 9.8bn profit provides evidence of resilience. The unresolved ownership structure, the succession of short OFAC licences and the approaching effect of higher-cost inventories remain the more consequential indicators of what comes next.
