Serbia's Russia-owned oil refinery faces shutdown as US sanctions bite, president says

SEATTLE (Oil Monster): Serbia's Russia-owned NIS oil refinery will shut down in four days if the United States does not lift sanctions on the project, risking fuel supplies ahead of winter, President Aleksandar Vucic said in a televised address on Tuesday.

The Balkan country does have enough fuel reserves in the short term, but a shutdown of its only refinery will halt production of gasoline, diesel and jet fuel and may hurt the country's economy, Vucic said.

He said that he would give the Russian owners, which include Gazprom Neft and Gazprom, 50 days to sell their stake in NIS or the Serbian state would take over operations and make an offer to buy them out.

"Serbia is facing major problems," Vucic said. "When you impose sanctions against Russia and its companies, they end up hitting our country," he said. Vucic said the sanctions may affect supply lines and electricity production.

Gazprom Neft did not immediately reply to a request for comment about NIS.

NIS REFINERY ON 'HOT STANDBY'

NIS said in a statement it began preparations for a shutdown of its Serbian refinery, the only one in the country, by placing it on a so-called hot standby that would allow a restart once crude oil becomes available.

"NIS continues to supply the domestic market with petroleum products without interruption, thanks to previously secured stocks," it said.

The U.S. Treasury Department’s Office of Foreign Assets Control imposed sanctions on Russia's oil sector in January, including NIS. The U.S. granted NIS repeated waivers before the sanctions finally came into effect in October.

Banks then stopped processing NIS payments and Croatia's JANAF pipeline halted crude deliveries to the refinery, forcing the Balkan country to look for alternative supplies ahead of winter.

The Serbian central bank also said in a statement it would stop all payment transactions for NIS if the company's operating licence was not extended.

Washington is seeking complete Russian divestment from NIS and on November 15 it gave the company's owners until February 13 to find a buyer for the Russian stake.

Gazprom Neft holds 44.9% of NIS and Gazprom 11.3%. Serbia owns 29.9%, with the rest held by small shareholders.

Serbia's government said on Monday it had sufficient fuel in its reserves to supply the domestic market.

Vucic said NIS has 55,000 metric tons of diesel and 50,000 tons of gasoline in its reserves, which are estimated to last until late December.

The state also has 184,000 tons of diesel and 19,000 tons of gasoline in reserves and an additional 20,000 tons of diesel and 35,000 tons of gasoline are expected to be imported in December and January, he said.

Serbia is also almost entirely dependent on imports of Russian gas via the Turk Stream gas pipeline.

 Courtesy: www.reuters.com