US sanctions on Russia-controlled NIS in Serbia take effect, impacting regional energy landscape

After months of delay, the US sanctions against Naftna Industrija Srbije (NIS), Serbia's oil industry company, officially came into effect on Thursday. This company, which is majority - owned by Russia and operates Serbia's only refinery, has become the latest target of the US in its efforts to strike at the Russian energy sector.

 After the sanctions took effect, NIS issued a statement saying that it had not obtained an extension of the special license from the US Treasury Department. It is actively communicating with the US side to be removed from the sanctions list and is striving to overcome the current difficulties. It is reported that 45% of NIS's shares are held by Gazprom of Russia. Last month, its parent company transferred 11% of the shares to St. Petersburg - based Intelligence Company, which is also associated with Russian energy giants. The Serbian government holds nearly 30% of the shares. As the core of Serbia's energy supply, NIS is responsible for the distribution of Russian - produced oil and gas in the country. Serbia almost completely relies on Russian oil and gas, which are imported through pipelines in neighboring countries such as Croatia. Although NIS emphasized that its current crude oil reserves and refined oil supplies are sufficient and there are no purchase restrictions at gas stations, it has been confirmed that foreign payment cards will stop working, and only local cards or cash payments are accepted. 

Serbian President Aleksandar Vučić previously warned that the sanctions would first hit the banking sector, saying, "No bank wants to take the risk of violating US sanctions." He revealed that negotiations are underway regarding NIS's future, including pushing Russian shareholders to divest. It is worth noting that although Serbia has applied to join the EU, it has refused to participate in sanctions against Russia due to its dependence on Russian natural gas. Currently, the old natural gas supply agreement with Russia is about to expire, and negotiations for a new agreement are in progress. The sanctions have had a regional impact. Janaf, a Croatian pipeline operator, expects its losses to reach 18 million euros ($21 million) this year. Its chairman said bluntly that "NIS needs to solve its own sanctions - related problems." Central European countries such as Hungary have previously warned that the sanctions could lead to a sharp reduction in regional crude oil supply, price increases, and pose a threat to energy security.