The Petroleum Industry of Serbia (NIS) has confirmed that the Pančevo oil refinery, using existing reserves, will operate until November 25, the Ministry of Mining and Energy announced.
This date marks the moment when the country’s only domestic refinery will stop processing crude oil. A temporary solution, which postponed the previously announced halt in operations on November 1, was found in the use of state reserves.
US sanctions against NIS, due to the presence of Russian capital in its ownership structure, came into effect on October 9.
Serbian President Aleksandar Vučić confirmed a few weeks ago that the state had sold “between 81 and 84 thousand tons” of crude oil from its reserves so that the Refinery “could operate.”
Experts, however, immediately warned that this was a short-term measure. Vladan Pavlović, an analyst at Ipopema Securities, explained to Nedeljnik that the Refinery, with a capacity of about four million tons annually, needs about ten thousand tons of crude oil daily.
Nebojša Atanacković, the owner of the company “AD Nafta,” emphasized to Nedeljnik that after the shutdown of the facility, the market will rely on what is already in the tanks and on the import of finished products.
“If the Refinery really stops working, then only existing reserves can be used, but new imports have probably already begun, for replenishment, and not through crude oil because it is not profitable to import it, but through the import of derivatives,” he explained.
In this context, Vučić stated at the beginning of the month that Serbia has 342,000 tons of diesel and over 66,000 tons of gasoline in reserves.
It is estimated that Serbia consumes about 1,500 tons of gasoline and 5,800 tons of diesel per month.
Serbia has a 2019 decree under which it can act if a disruption in the oil and fuel market occurs—it mandates the activation of reserves, and if the crisis persists, the introduction of a “par-nepar” (odd-even) system and working from home to save fuel. You can read everything that decree provides here.
The only solution for the situation NIS finds itself in, according to Washington’s stance conveyed to Nedeljnik by diplomatic sources, is for Serbia to be proactive and offer a formal proposal for the status of the Petroleum Industry of Serbia.
Two options are in circulation: that “Serbia takes NIS,” which was not explained in detail, and the “disinvestment of Russian co-owners” from the company.
The example of Lukoil is cited as a model; it agreed to sell its assets outside of Russia in accordance with a license from the US OFAC, the body responsible for implementing economic sanctions.
President Vučić previously stated that the nationalization of NIS is the “last resort,” but also that the state will “take matters into its own hands” if more serious problems in the Refinery’s operation occur.
Source: Nedeljnik Photo: Promo