Since January 10, when the U.S. first announced sanctions on the Serbian Oil Industry (NIS) due to Gazprom Neft’s majority ownership, the case has been shrouded in secrecy.
From the start, it was clear that Serbia found itself caught between two major powers competing for political influence in a small Balkan country. The sanctions posed a serious threat to the country’s economy, as NIS contributes around five percent to Serbia’s GDP and employs approximately 13,000 people. NIS is also crucial for fuel supply: prior to the sanctions announcement, 70 percent of diesel and 85 percent of gasoline consumed in Serbia were produced at NIS’s Pančevo refinery, with the remainder imported.
Government officials have released minimal information, only noting that negotiations are ongoing. The public has largely relied on media speculation and statements from energy experts. Reports indicate that Serbia has engaged lobbyists in the U.S. to try to prevent the sanctions, and media coverage has highlighted changes in ownership structure and estimated fuel reserves of three to six months. However, the government has not confirmed the lobbyists’ engagement, their costs, their actions over the past ten months, or the exact content of negotiations between Serbia, Russia, and the U.S. The precise fuel reserves that could sustain the country without NIS remain unknown.
So far, the sanctions have only been postponed month by month. According to the latest announcements, they are now officially set to take effect on October 8. There has been no official explanation of how Serbia is preparing for this scenario or what will happen if the sanctions last longer than three to six months. Questions remain about fuel imports, NIS’s ability to continue processing for domestic needs, potential shortages, and further increases in fuel prices, which are already among the highest in Europe. There is also uncertainty regarding the future of NIS’s 13,000 employees.
The situation underscores the importance of state ownership in energy companies. Had NIS been fully state-owned, this crisis might have been avoided. Serbia could have continued importing oil through JANAF and refining it domestically, potentially ensuring more stable and cheaper fuel prices. This scenario also serves as a cautionary tale about the risks of privatizing other key energy assets, such as EPS.
