The announced US sanctions on Serbia’s Oil Industry (NIS), set to take effect next year, could lead to turbulence in the local market, considering that oil and gas supplies from Serbia are critical. While Republika Srpska might face challenges, the Federation of Bosnia and Herzegovina could experience even greater difficulties due to its reliance on Russian gas.
However, it is still unclear how these sanctions will precisely impact the domestic market, as details regarding the scope of the sanctions remain unknown.
In Republika Srpska, NIS operates through its subsidiary “Jadran-Naftagas,” based in Banja Luka, which holds concessions for crude oil exploration and extraction. Since 2022, crude oil from exploration wells in the municipality of Šamac has been exported to Serbia and integrated into NIS’s system. Additionally, NIS is present in Bosnia and Herzegovina through a retail network of 32 gas stations.
Potential Impacts on Republika Srpska
The announced sanctions are not expected to cause major disruptions in Republika Srpska’s market, as noted by Nedeljko Elek, director of Sarajevo-Gas:
“Republika Srpska has implemented a smart policy of capping fuel margins. I believe we can maintain current prices, but we will need to seek alternative suppliers.”
Economist Igor Gavran highlighted potential challenges if the sanctions materialize:
“Should the sanctions fully take effect as they have for other companies under sanctions in Bosnia and Herzegovina, we could face blocked accounts. On an international level, NIS may be banned from imports, leading to fuel supply difficulties until other distributors step in to fill the gap.”
NIS’s Response and Serbia’s Preparedness
NIS has announced that it is closely monitoring the situation and analyzing all potential scenarios. The Serbian government has formed a task force to address any consequences arising from the sanctions. NIS clarified that there are currently no legal restrictions affecting its operations or those of its partners.
Serbia’s economy could face significant repercussions, given that NIS contributes around 10% to the state budget. According to Jelica Putniković, editor of the “Balkan Energy” portal:
“Serbia’s economy relies heavily on two pillars: the oil industry and EPS (Electric Power Industry of Serbia). If the oil sector is compromised, the entire economy would feel the strain.”
Broader Implications
The US emphasizes that these sanctions are not targeted at Serbia or its people but at NIS due to its majority ownership by Russia. US Ambassador to Serbia Christopher Hill stated:
“There is significant concern that the profits from NIS, which have been substantial, have not returned to Serbia. Instead, they have funded this war, and we are deeply worried about that.”
Bosnia and Herzegovina imports most of its oil and petroleum products from Serbia. Sanctions on NIS could lead to fuel price increases in Bosnia and Herzegovina, potentially triggering a rise in the cost of other goods. Analysts suggest that such a scenario cannot be ruled out.
Source: RTRS
