Gazprom’s NIS Set to Face US Sanctions, Serbian Leader Says

(Bloomberg) -- Naftna Industrija Srbije, Serbia’s sole refiner and oil and gas producer that’s controlled by Gazprom’s oil arm, is set to face US and UK sanctions as soon as next month, Serbian President Aleksandar Vucic said in an interview to a local broadcaster.

“It’s been confirmed to us that the US will impose the strictest sanctions against Naftna Industrija Srbije,” Vucic told Belgrade-based Informer TV late Friday, without specifying where he got the information. “We haven’t received official papers but the US is introducing in several days complete sanctions” against NIS and “the British will join that, which means everyone,” he said, adding that the sanctions could take effect as of Jan. 1. 

Gazprom Neft bought a majority stake in Serbia’s main petroleum company in 2008, increasing the holding later to 56.15%. In 2022, it transfered a 6.15% stake in NIS to its parent, amid Western restrictions over Russia’s attack on Ukraine. The Serbian state has held a minority stake of just under 30% in the top-traded company on the country’s stock exchange.

“It’s probably one of the hardest news in the last several years,” Vucic said, suggesting that the Serbian state might take over an unspecified stake in NIS to change its ownership structure to try to escape the punitive measures.

Under Vucic, Serbia — a candidate for European Union membership — has sought to balance its ties with Western powers, Russia and China. The government has condemned the Kremlin’s aggression on Ukraine but stopped short of joining sweeping sanctions.

Serbia relies heavily on gas from Gazprom, even after efforts to diversify away from Russian supplies. It’s in talks with Russia to extend a gas supply contract that expires in March.

The US Treasury Department, Gazprom and Gazprom Neft didn’t immediately respond to requests for comments sent on Saturday.  

“Once we see the documents we’ll talk first with the Americans, then we go to talk to the Russians,” Vucic said on Saturday to state broadcaster RTS. “We must solve the problem, we can’t leave Serbia without oil in the middle of the winter, and at the same time we’ll look to keep our friendly relations with Russians and take care not to spoil relations with those who impose sanctions.”

NIS’s main refinery in Pancevo, just east of Belgrade, has relied on crude imports through a pipeline in neighboring Croatia. Anticipating that the ever-tightening sanctions may render the pipe unusable for NIS, Serbia has made plans to hook up to crude supplies from the Druzhba pipeline via neighboring Hungary from 2026.

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