Serbia Faces Economic Crisis as US Sanctions Hit Oil Supply, Government Prepares Intervention
BELGRADE, November 21, 2023 - Serbia is bracing for a potential economic crisis after US sanctions targeting Russia’s oil industry effectively halted crude oil deliveries via the Adriatic pipeline through Croatia on October 9th. The sanctions are also disrupting financial transactions, preventing motorists from using international bank cards at NIS (Naftna Industrija Srbije) gas stations, limiting payment options to cash or domestically issued cards.
The crisis stems from ownership changes within NIS,Serbia’s national oil company. Prior to the sanctions, Gazpromneft held a 50% stake, Gazprom owned 6.15%, the Serbian state held 29.87%, and the remainder was distributed among smaller shareholders. In the lead-up to the sanctions, Gazpromneft transferred approximately 5% of its stake to Gazprom, shifting ownership to 44.85% for gazpromneft and 11.30% for Gazprom. Gazprom then transferred its 11.3% share to its subsidiary, Intelligence, on September 19th.
These ownership shifts triggered the US sanctions, which have severely impacted NIS’s operations. The company has requested the immediate lifting of the sanctions, but Washington has stated it will only consider doing so after a complete change of ownership.
Serbian President aleksandar Vučić warned on Tuesday that indirect sanctions could inflict even greater damage,stating,”if,for example,the operation of the Serbian National Bank stops,essentially none of the domestic financial institutions will be able to operate,and people will not even be able to use their international bank cards,or trade,healthcare,electricity and everything else will stop.”
Negotiations between the Russian side and a potential third-party buyer are reportedly ongoing, but Belgrade has declined to reveal the buyer’s identity. Vučić announced that if the Russian side does not sell its shares within fifty days,the Serbian state will be forced to intervene,offering the highest possible price for the Russian shares,but stopping short of expropriation. He noted serbia had the right of pre-emption since 2022, but refrained from exercising it to maintain a fair approach towards Russia.
Despite the immediate challenges, Vučić assured the public that Serbia currently possesses sufficient reserves of petroleum derivatives, but emphasized the urgent need to secure NIS’s continued operation.
in a related advancement, vučić announced plans to meet with Hungarian Prime Minister Viktor Orbán on Wednesday. He offered Serbia’s participation in the Paks II nuclear power plant project and othre energy initiatives to bolster energy security, having previously extended an offer to participate in the ownership of the LNG terminal and warehouse in Alexandroupolis, Greece. he stated, “I offer Serbia’s participation in paks II and other energy projects that can provide us with security.”
