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U.S. Ambassador discusses potential sanctions on NIS amid geopolitical tensions

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U.S. Ambassador to Serbia, Christopher Hill, commented on the uncertainty surrounding potential U.S. sanctions on the Serbian Oil Industry (NIS). He emphasized that it is not the intention of the U.S. to harm Serbia’s economy or bilateral relations, but acknowledged growing concerns since Russia acquired NIS and its refining and production facilities. Hill highlighted that while Russia has significantly profited from NIS, it has failed to reinvest in Serbia, with all profits being funneled abroad, particularly to Russia. This issue has become more urgent following the outbreak of the war in Ukraine.

Hill clarified that the sanctions under discussion are not aimed at damaging Serbia’s economy but are part of broader geopolitical considerations. He confirmed ongoing dialogues between the U.S. and Serbian government officials regarding this matter, though he noted that no quick decisions are expected.

In response to these uncertainties, NIS has reassured the public with a statement that fuel supplies are stable and production at the Pančevo Refinery is proceeding as normal. Despite these assurances, speculation about rising fuel prices and potential fuel shortages has been widespread, recalling the situation in 2022 when EU and Biden administration sanctions led to a shift in the source of crude oil delivered to Serbia, keeping fuel supplies stable.

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Petar Stanojević, a professor at the Faculty of Security and former energy advisor, explained that Serbia’s priority should not be the ownership structure of NIS but rather the security of oil supply to maintain market stability. He warned that if sanctions target oil transporters, specifically Russian tankers, Serbia could face a disruption in crude oil supply, which would increase refining costs and potentially lead to higher fuel prices.

If oil transport from JANAF (the pipeline that supplies Serbia) were to be blocked, domestic oil production, which meets only around 20% of Serbia’s needs, could become the only secure supply. Stanojević suggested that alternative transport routes, such as barges on the Danube, could mitigate the situation, though this would incur logistical challenges.

He also proposed that Serbia could explore the option of purchasing or leasing additional oil infrastructure, such as tanks or oil pipelines from Hungary or Greece, to diversify its supply chains. Another potential solution could be reducing Russian ownership in NIS to avoid sanctions, with the Serbian government potentially acquiring a larger stake in the company.

Stanojević also reflected on how other Russian oil companies have navigated similar sanctions. For example, “Lukoil” was forced to sell its major European refineries due to sanctions, and Bulgaria recently took control of a key refinery under national security laws.

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As the situation develops, the Serbian government faces critical decisions regarding how to secure its energy supply while balancing geopolitical pressures.

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