US offers temporary sanctions relief to Russian-controlled Serbian oil firm

The United States has granted a majority-Russian-owned Serbian oil company a temporary reprieve from sanctions targeting Moscow's invasion of Ukraine, a Serbian minister said on Wednesday.

Washington's sanctions on the Petroleum Industry of Serbia (NIS), part of its crackdown on Russia's energy sector, forced the shutdown in early December of Serbia's sole oil refinery, which supplies around 80 percent of the Balkan country's fuel needs.

The measures have hit hard in Serbia, a key Kremlin ally and one of the few European countries not to have imposed sanctions on Russia over the Ukraine war.


"NIS has obtained a licence from US OFAC (the Office of Foreign Assets Control) allowing it to continue operations until January 23. This means that the Pancevo refinery will be able to resume operations after 36 days," Serbian Energy Minister Dubravka Djedovic Handanovic said on Instagram.

The reprieve will allow the Pancevo refinery, located near the capital Belgrade, to resume its activities refining crude -- a significant relief for Serbia, which has had to dip into its fossil fuel reserves to satisfy domestic demand.

"We have achieved what seemed almost impossible. We will safeguard our energy security, as we have done so far," Handanovic added.

After nine months of successive postponements, Washington on October 9 imposed sanctions on NIS, demanding the complete exit of Russian shareholders and preventing the refinery from receiving supplies.

But talks over its potential sale have dragged on, with analysts warning that the refinery's closure could shrink Serbia's economic growth and threaten thousands of jobs.

NIS employs some 13,500 people, and contributed more than two billion euros ($2.5 billion) in tax revenue, or nearly 12 percent of the national budget, according to the firm's annual report.

'Phenomenal news'
Shortly before Handanovic's announcement, President Aleksandar Vucic said on social media that he believed he could soon announce some "phenomenal political news".

"We've worked hard, we've earned it," Vucic added, without offering further details.

NIS is 45-percent owned by Gazprom Neft, which has been targeted by US sanctions. Its parent company, Gazprom, transferred its 11.3-percent stake in NIS in September to another Russian firm, Intelligence.

The Serbian state holds nearly 30 percent of NIS, with the rest owned by minority shareholders.

According to the Serbian national broadcaster RTS, Hungarian Prime Minister Viktor Orban was involved in discussions between Vucic and the US State Department earlier Wednesday, while the Hungarian firm MOL is in negotiations to buy the Russian portion of NIS's shares.

Meanwhile, Croatian pipeline operator Janaf, which had stopped supplying crude to the Pancevo refinery because of the sanctions, also announced it had been informed by OFAC about the reprieve.

This decision "allows us to continue implementing our agreement (with NIS) on oil transportation" until January 23, the Croatian company stated.

The two companies have a contract for crude transport valid until the end of 2026, for a total capacity of 10 million tonnes.