Serbia seeks 180-day extension of US sanctions waiver for NIS

Serbia has submitted a formal request to the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) to extend a sanctions waiver on its Russian-controlled oil company, Naftna Industrija Srbije (NIS), for an additional 180 days, Energy Minister Dubravka Dedovic Handanovic said on July 24.

The waiver, which is set to expire on July 29, would mark the fifth such extension since OFAC first announced sanctions targeting NIS earlier this year in connection with broader US measures against Russia’s oil sector. The Serbian government has emphasised the company’s strategic role in national and regional energy security.

"Over the past month, and consistently since January when the potential US sanctions against NIS were first announced, we have firmly maintained our position that such measures would severely impact Serbia’s and the region’s energy security," Djedovic Handanovic said in an official statement. "We have emphasised to US authorities that sanctions would bring substantial negative consequences for our country, citizens, and economy."

NIS, Serbia’s sole oil company, operates the country’s only oil refinery in Pancevo and is responsible for domestic oil refining, exploration and distribution. It is majority-owned by Russian energy giant Gazprom, which holds a combined stake of 56.15% through Gazprom and its subsidiary Gazprom Neft. The Serbian government owns 29.87%.

The Biden administration imposed sanctions on Gazprom Neft in January, ordering it to divest its stake in NIS within 45 days. In response, Gazprom Neft transferred a 5.15% stake to its parent company in February in an apparent effort to reduce direct ownership below 50%. Nonetheless, NIS remains on OFAC’s Specially Designated Nationals (SDN) list.

Belgrade has argued that the sanctions would jeopardise energy supply across the Balkans and worsen the country’s economic outlook. Serbia, which is grappling with high inflation and slowing growth, relies heavily on NIS to supply both households and businesses.

"A 180-day extension would support the procurement of crude oil for the Pancevo refinery on commercially viable terms and help maintain energy supply stability across Serbia and neighbouring countries," the minister said, warning that sanctions would “significantly threaten industrial performance and regional energy stability.”

NIS imports around 80% of its crude oil through Croatia’s Janaf pipeline, with the rest sourced domestically. Its refinery processes up to 4.8mn tonnes of crude annually and supplies not only Serbia but also Bosnia, Bulgaria and Romania.

Dedovic Handanovic noted that Serbia was working closely with both US and Russian counterparts to reach a sustainable resolution. “The Serbian Government remains committed to finding a permanent and sustainable solution for NIS… to ensure the continuous and secure supply of crude oil and the uninterrupted operation of the Pancevo refinery,” she said.

She also thanked Hungary for its continued support in pushing for an extension. “Hungary has consistently backed Serbia’s requests for NIS licence extensions, and we are grateful for the continued support of our strategic energy partner,” she said.

Despite challenging negotiations, Serbian officials are hopeful that Washington will grant another short-term exemption, even as they lobby for a longer-term resolution.

“We are in an unenviable situation between two great powers, Russia and America,” Djedovic Handanovic told national broadcaster RTS earlier this month. “Negotiations are quite tough.”