Pančevo refinery critical for Serbia’s energy security, experts warn

Serbia cannot operate without the Pančevo refinery, even under optimal import conditions, with the main issue being the deficit depth for each petroleum product, according to Dr. Ivan Brajović, an economist specializing in the international oil and gas business, speaking to Energija Balkana about the increasingly likely shutdown of the Pančevo refinery.

The contribution of Naftna Industrija Srbije (NIS) production to domestic consumption varies by product, meaning that each fuel type is differently affected by current disruptions.

• Diesel: Serbia consumes approximately 2.2 million tons annually, of which NIS produces 1.5 million tons (68%) for the domestic market, while 700,000 tons are imported (32%).
• Gasoline: Annual consumption is around 505,000 tons, with NIS supplying 375,000 tons (74%) and imports covering 130,000 tons (26%).
• Kerosene: The most critical product, with Pančevo refinery covering over 95% of Serbia’s 205,000-ton annual consumption, making it highly vulnerable.

Brajović emphasizes that aviation and the petrochemical industry, particularly HIP-Petrohemija Pančevo, are the most exposed sectors, as they depend entirely on Pančevo’s output.

Supported by

Regarding importing additional derivatives, Brajović notes that imports have increased according to the financial and logistical capacities of importers, but these resources are limited. While theoretical supplies from surrounding refineries and terminals could meet Serbia’s total demand, practical limitations in logistics, storage, and transportation make full coverage unfeasible.

Secondary sanctions pose another risk: suppliers of oil, technology, and services may halt cooperation with NIS, while banks could suspend transactions, potentially preventing NIS from performing its core operations.

NIS has a significant economic impact: its direct contribution to Serbia’s GDP is around 5%, and it accounts for over 10% of state budget revenues. Brajović warns that a shutdown of Pančevo would destabilize Serbia’s economy, driving fuel prices up and triggering a chain reaction: higher transportation and production costs in energy-intensive sectors such as energy, industry, mining, and agriculture, ultimately increasing prices of all goods and fueling inflation.