Energy experts on sanctions against NIS: Unprecedented decision, consequences to be clearer when it is made more precise

Energy experts have said they cannot assess with certainty the consequences of the introduction of US sanctions on Naftna Industrija Srbije (NIS) due to the imprecision of the decision, but they point out that it is unprecedented and that the consequences for the supply of oil products to the market in Serbia could be enormous.

According to the energy expert Milos Zdravkovic, the official explanation that the sanctions were introduced to sanction Russia's ability to finance the war in Ukraine cannot be accepted, because the facts speak differently.

– This is an unprecedented decision, problems with the supply of oil and oil products to the market in Serbia will follow if nothing changes – Zdravkovic told Beta.

He added that the profits made by the Russian companies Gazprom and Gazprom Neft, which own 56.15% of the ownership in NIS, were minor compared to the revenues made by larger companies in Russia that are not under sanctions.

– One Russian company exports two million barrels of oil to China daily, which the country uses and does not re-export. It exports 2.1 million barrels to India, which is why that country was a bigger supplier to Europe last month than Saudi Arabia. That’s why the notion that sanctions are punishing the Russian budget through NIS is ridiculous – said Zdravkovic.

He added that the Russian company Novatek is the second largest exporter of liquefied petroleum gas to Europe, after Norway.

In certain periods when, as he said, the Americans had problems with gas, they also imported it from Russia, although they have a greater ability to export gas than Russia, and even oil, but the current president Joe Biden banned mining and exploitation of oil and gas in Nevada due to his green agenda.

Recently, Zdravkovic said, he also banned the Shell company from mining on the Pacific coast, on 2.5 million square kilometers, which would have increased American oil production by 12% to 14%.

The problem for the new US President Donald Trump, according to him, is that under the US law from 1952, the president cannot overturn a decision of his predecessor related to environmental protection without the approval of Congress or the Senate.

– I count on the EU to protect its member Croatia from the ban on oil transport through the Janaf oil pipeline, which supplies NIS with crude oil, which makes up 74% of its turnover and from which the company has an annual income of USD 60-64 million – said Zdravkovic.

He pointed out that if the EU nevertheless joined the US sanctions and forced Croatia to implement them, NIS would be left without 82% of its crude oil for processing.

According to him, private gas stations Hellenic Petroleum, OMV and Mol cannot supply the Serbian market, because they also bought derivatives from NIS, from the refinery in Pancevo.

– We have oil reserves for 80 days, and what do we do after that. Another thing is that I don't see why Russian companies would agree to sell their stake in NIS when there is no international law basis for sanctions. I believe they will refuse to sell it – said Zdravkovic.

He said that he believed that Gazprom and Gazprom Neft would refuse to sell their stake to Serbia and that Serbia couldn’t forcibly take over shares from “a state that is not only a power, but a nuclear power.”

Zdravkovic said that the decision on sanctions would certainly undermine America’s image in the world.

The energy expert Zeljko Markovic said that the document on the US Department of the Treasury’s website does not provide details on whether the sanctions apply to majority ownership of Russian companies or the entire ownership, so it is difficult to predict the consequences.

In addition, it is unclear, as he said, how the financial purchase and sale transaction would be carried out in the event that the Serbian state decides to buy part or all of the ownership of Russian companies in NIS.

– Above all, the question is whether Russian companies would sell their stake in NIS, and another problem is that even in the event of a forcible takeover, it would have consequences for Serbia’s gas supply via the TurkStream – said Markovic.

NIS a.d. Novi Sad

NIS

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Gazprom neft

Novatek

Miloš Zdravković

Joe Biden

Donald Trump

Željko Marković

Janaf

TurkStream

sanctions against NIS

US sanctions against NIS

American sanctions

consequences of implementation of American sanctions against Naftna industrija Srbije