Russians come up with proposal to save Petroleum Industry of Serbia: Is this the best scenario?

Photo: Shutterstock

The Russian side in the negotiations regarding US sanctions against Petroleum Industry of Serbia, NIS, which have been delayed until October 8, has proposed including US crude oil in the company's oil purchases as a potential solution, Tanjug said it has learned.

Recommended

If the US accepts the proposal NIS would be start buying substantial quantities of US crude oil via the JANAF pipeline and mixing it with other oil as part of its so-called crude oil basket.

At the same time, it is not realistic for NIS to switch to processing exclusively US oil in order to avoid US sanctions, since our refineries are not technologically configured for that.

Unofficially, one of the Russian proposals is for a US company to acquire an 11.3 percent stake in NIS that Gazprom recently transferred to its daughter company Intelligence, but it remains to be seen if this would be acceptable to either side.

On September 30, the US Treasury Department issued a new special license delaying full implementation of US sanctions against Petroleum Industry of Serbia and enabling the firm to operate without obstructions until October 8, NIS announced on Wednesday.

Sanctions against NIS were supposed to come into effect on October 1, but after negotiations led by President Aleksandar Vucic, the US side decided to postpone that deadline by another eight days.

JANAF announced on Wednesday that it received a license from the US Office of Foreign Assets Control (OFAC) to continue honoring the contract on transportation of crude oil it has with NIS until October 8.

The pipeline added that in the coming days, through its legal representative in the US and with the support of the Croatian government, it will apply to OFAC to extend the license.

The US Treasury Department previously issued a new special license on August 26, which allowed NIS to carry out its operational activities smoothly until September 26.

It was the sixth special license that delayed the full implementation of sanctions against NIS.

In mid-December 2024, the US administration announced for the first time that it would impose sanctions against NIS due to the Russian stake in the ownership structure. These sanctions were supposed to take effect on February 28, but were first delayed by 30 days.

The joint-stock company Intelligence from St. Petersburg took over 11.3 percent of NIS shares from Gazprom in mid-September, thereby crossing the threshold of significant participation in one of the largest domestic companies.

As stated in the document published by the stock exchange, Intelligence acquired 18,433,297 shares and Gazprom retained one share in NIS. The change took effect on September 19.

Now Gazprom Neft has 44.85 percent share, the Republic of Serbia 29.87 percent, other minority shareholders 13.98 percent, and Intelligence 11.30 percent.

On September 4, a company known as Flystar Flight Support - a subsidiary of UK-based Menzies, which operates in Serbia - received a 10-year license for storage of oil and oil derivatives from the Energy Agency of Serbia.

The website magazinbiznis.rs writes that the license was given because of the possible implementation of US sanctions against NIS. A week earlier, that company received a license to trade in oil and oil derivatives, also covering 10 years.

This is the first time that Flystar Flight Support has requested licenses to trade and and store oil and oil derivatives from Serbian institutions, and received them when it fulfilled all the stipulated conditions, the report said.

Flystar Flight Support has been operating in Serbia since 2022 and has 13 employees. It is registered to provide aviation services in the sector of business aviation, corporate and private flights, cargo flights, diplomatic flights, medical and humanitarian flights. The company is present in all former Yugoslav republics, and in Albania.

(Telegraf.rs/Tanjug)