US denies operating license to Serbia’s Russian-owned oil refinery

Serbia failed to secure a United States operating license for its Russian-owned oil refinery, forcing the facility to halt operations and threatening the country's fuel supply, President Aleksandar Vučić said Monday.

The United States rejected Serbia's request to continue crude oil supplies to the Pančevo refinery while Russian owners seek buyers for their majority stake in the Petroleum Industry of Serbia (NIS), Vučić said.

"We expected to receive a license from the US government to continue supplying oil to our refinery in Pančevo. We did not receive a positive decision," Vučić said. "I am not only disappointed, but also surprised, because I don't see what they gained from it."

Russia does not want to sell NIS, the Serbian president said, adding the issue concerns politics rather than money. He said the US Office of Foreign Assets Control (OFAC) has shown no indication it will reverse its decision. "That is their right, they are the owners," Vučić pointed out.

Serbia's Energy Minister Dubravka Đedović Handanović will inform NIS the refinery must cease operations, Vučić said. The facility loses €370,000 daily operating under current restrictions.

Serbia has provided NIS permission to shut down the refinery 54 days after US sanctions took effect.

The National Bank of Serbia and commercial banks could face secondary US sanctions for conducting transactions with NIS, Vučić warned.

"That would be a catastrophe for our investment rating and for everything else," he said. "Whenever the payment system is disrupted, it creates huge problems for the company."

The crisis extends beyond NIS to threaten Serbia's entire economy, Vučić said. After 13 December, neither NIS nor Lukoil can receive strategic fuel reserves from the government, meaning sanctions would effectively apply to all of Serbia.

Serbia will supply fuel derivatives to all outlets except those owned by NIS, the president said.

Fuel reserves sufficient until late January

Serbia has sufficient fuel stocks but faces logistical challenges, Vučić said. Supplies include 53,900 tonnes of diesel in operational reserves across Pančevo, Kovin and Požega, plus 150,000 tonnes in mandatory reserves — totalling over 200,000 tonnes of diesel.

The government ordered an additional 29,000 tonnes of diesel, 20,000 tonnes of diesel, 5,000 tonnes of kerosene and 38,000 tonnes of gasoline, he said.

"There will be no problem with this supply until the end of January, no matter how much we consume," Vučić said. Supplies of gasoline and mazut are also adequate.

Transport costs will increase as tankers must travel to alternative locations including Ledince and Smederevo, the Serbian president said.

Croatia's JANAF pipeline blocked oil imports intended for Serbian reserves rather than the refinery, claiming they doubted the oil was for storage, Vučić said.

"They rejected it because they want to signal that it is not just NIS under sanctions, but the whole of Serbia, unless the Americans say otherwise," he said.

Gas contract deadline Friday

Serbia has not yet secured a gas contract and will procure supplies from alternative sources if no agreement is reached by Friday, Vučić said.

The government gave Russia until 15 January to sell NIS, after which "the state of Serbia will step in," though Vučić did not specify what action Serbia would take.

"For now, only Serbia suffers; how things will develop further, we will see," he concluded.

US sanctions on NIS took effect 9 October after multiple delays. Gazprom Neft owns 44.9% of NIS and Gazprom holds 11.3%, while Serbia owns 29.9%.

The company employs about 13,500 people and operates more than 400 fuel stations across Serbia and approximately 80 in Bosnia, Bulgaria and Romania.