Serbia warns oil refinery faces shutdown as US sanctions bite

A Big Problem for Serbia

Serbia is facing a major energy crisis. This serious situation is happening because of US sanctions (Serbia warns). The sanctions are hitting Serbia’s only oil refinery. This refinery has called Naftna Industrija Srbije (NIS).

President Aleksandar Vučić has spoken out. He gave a strong warning. He said the refinery might have to shut down very soon. This shutdown would be a disaster for Serbia. It would affect how people travel and heat their homes. The main reason for this problem is the refinery’s ownership. A big Russian company owns most of NIS. This makes the refinery a target for US actions against Russia. Serbia warns

The US sanctions are a big challenge. They stop the flow of crude oil. They also stop important financial deals. If NIS shuts down, Serbia will lose its main source of fuel. This single event could hurt the country’s entire economy. President Vučić and his team are now trying to find a fast and working solution. They must deal with a tough choice. They need to keep friendly ties with Russia. But they also need to protect Serbia’s energy security from the US sanctions. Serbia warns

What is NIS and Why Does it Matter? Serbia warns

Naftna Industrija Srbije (NIS) is extremely important for Serbia. It is the only oil refinery in the country. This means it makes almost all the fuel that Serbia needs. The main refinery has in a town called Pančevo. It is near the capital, Belgrade.

This refinery makes many vital products. It creates gasoline for cars. This makes diesel for trucks and heating. It even makes jet fuel for airplanes. This domestic production is a key part of Serbia’s independence. It gives Serbia control over its own fuel. Serbia warns

How much fuel does NIS make? Experts say the Pančevo refinery produces about 80% of all fuel used in Serbia. Only a small amount, about 20%, has usually imported. If this one refinery closes, the country will lose the ability to make most of its fuel. This would force Serbia to buy almost everything from other countries. This sudden change would be very difficult and expensive. It would also make Serbia less secure in its energy supply. Serbia warns

NIS is a large company. It provides jobs for many people. It has about 13,500 workers. The company also runs more than 400 petrol stations across Serbia. It has stations in nearby countries too. This is a big part of the national economy. It brings in billions of euros in revenue each year. The sanctions are putting this entire company, and all its jobs, at risk.

The Russian Ownership Problem Serbia warns

The crisis comes down to who owns the refinery. NIS has majority-owned by Russian companies. In 2008, Serbia sold a large part of NIS. They sold a 51% stake to Russia’s Gazprom Neft. This was part of a larger energy deal between the two countries. Serbia warns

Today, the numbers show Russia still has control. Gazprom Neft holds about 44.9% of the shares. Another Russian-controlled company holds an 11.3% stake. This means Russian entities own more than 56% in total. The Serbian state owns nearly 30% of NIS. The rest has owned by smaller investors.

The problem is that Gazprom Neft is on the US sanctions list. The US wants to reduce Russia’s income from its energy sector. Because NIS has controlled by a sanctioned Russian company, NIS itself has now sanctioned. The US measures were first planned a long time ago. They have put off several times. But on October 9, they finally came into full force against NIS. Serbia warns

This is a serious move by the US. It tells Serbia that this ownership structure has not allowed anymore. Washington is demanding a complete Russian divestment. This means the Russian owners must sell their majority stake in NIS. This sale has the only way to get the sanctions lifted.

How the Sanctions Are Hitting Hard Serbia warns

The sanctions are already hurting NIS operations badly. The refinery is not shut down yet, but it is running at a much lower level. President Vučić said the Pančevo refinery is in a state called “warm circulation.” This is a low operating mode. It is a step before a complete halt. He said the refinery could stop working fully within days if a solution is not found.

The first major problem is the crude oil supply. Oil cannot reach the refinery anymore. The JANAF pipeline in Croatia has stopped delivering crude oil to Pančevo. This is because NIS is now under sanctions. Without raw crude oil, the refinery cannot make finished products. It does not matter how good the equipment is. It needs the oil to work.

The second huge blow is to the company’s finances. Banks around the world are scared of the US sanctions. They have stopped processing payments for NIS. They fear they will face penalties, too. This lack of financial services makes it very hard for NIS to pay for things it needs. It also makes it hard to sell its products. The company needs to be able to move money to operate. Without a working banking system, it faces fast bankruptcy. Serbia warns

The Serbian central bank has also given a warning. The National Bank of Serbia said it would have to stop working with NIS. This would happen if the company’s operating license is not extended soon. This shows how close the situation is to total financial collapse for NIS.

The Risk of Secondary Sanctions Serbia warns

President Vučić has warned about an even bigger danger. This danger is called secondary sanctions. These are sanctions placed on a third party, like Serbia, for doing business with a sanctioned entity, like NIS. The US could use these powerful sanctions to punish Serbia. Serbia warns

This risk is why Serbian banks are scared. If the US decides to apply secondary sanctions, it could target Serbia’s entire banking system. Vučić explained the terrible things that could happen:

• Payment Stop: There could be a complete stop to all payment transactions.
• Card Failure: Card functionality for citizens could stop working.
• Credit Problems: Credit insurance and other loan services could end.

This would be a deep crisis. It would not just be an energy problem. This would be a full-scale financial and economic disaster. It would hurt every single person and business in Serbia. This fear is a major reason why the Serbian government is working so hard to find a quick fix. They must save the country from this economic threat.

A Choice for Serbia’s Future

The warning from President Aleksandar Vučić is very serious. The potential shutdown of Serbia’s only oil refinery, NIS, is not just a commercial failure. It is a risk to Serbia’s national energy security and its economic stability. The US sanctions, driven by the Russian majority ownership, have created a full-blown crisis. Serbia warns

The immediate goal for Belgrade is to get a temporary operating license from the US. The long-term goal is the change in ownership. The Russian owners must sell their controlling stake. The Serbian government has shown it is ready to buy the company if no other buyer is found. This shows the national importance of keeping the refinery open.

The next few weeks are critical. The success of the negotiations will decide two things. First, it will decide if Serbia can avoid a major energy crisis this winter. Second, it will decide the direction of Serbia’s future foreign policy. The country must now find a way to escape this problem. It must secure its energy future, even if it means changing its relationship with a long-time partner. Serbia warns

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