Since the U.S. administration imposed energy sanctions on companies with Russian capital, including NIS, on January 10, little has been said about the future of Petrohemija, a company based in Pancevo. Petrohemija has been part of NIS since June 2023. Jelica Putniković, founder and editor-in-chief of the “Energy of the Balkans” portal, spoke to RTS about possible solutions to the U.S. embargo and the importance of Petrohemija for NIS as an oil refiner.
Putniković explained that Petrohemija, like all NIS subsidiaries, will face consequences from U.S. sanctions. She noted that its integration into NIS was a natural progression, as refinery processing must adapt to new technologies and the trends of the Fourth Industrial Revolution.
“Petrochemical products are crucial because the green transition calls for reduced consumption of oil derivatives in the future. This means that the output from oil refining will increasingly shift towards petrochemical products. That’s why it was essential for NIS to bring Petrohemija into the fold,” she said.
Reflecting on the history of the Oil Industry of Serbia, Putniković mentioned that Petrohemija was once a major exporter in the 1990s, and some opposed its merger with NIS at the time.
“Now, it turns out that Petrohemija needs the support of a larger entity, both for raw materials and profit. The sale of oil and petrochemical products is cyclical, with fluctuating demand and prices. Last year, Petrohemija faced some losses, but it remains one of the country’s top ten export companies,” she explained.
Putniković also noted that while none of Petrohemija’s partners have canceled orders, some airlines have stopped purchasing kerosene from Belgrade Airport, which is owned by NIS.
“Some banks, both officially and unofficially, have indicated they will cease cooperation with NIS, even though these U.S. sanctions have yet to take effect,” she added, warning that further cooperation could be halted if American partners raise concerns.
Petrohemija’s ongoing modernization
According to Putniković, Petrohemija started its transformation even before becoming part of NIS. “Before NIS took over 90 percent of Petrohemija’s ownership, efforts to modernize the company and set it on a stable footing had already begun.”
She explained that, like many state-owned enterprises, Petrohemija struggled with stagnant profits and minimal investment despite being one of Serbia’s largest exporters.
“US sanctions will significantly hinder Petrohemija’s development,” Putniković acknowledged, pointing to MOL, a Hungarian company, which entered the petrochemical business due to its profit potential.
Could Petrohemija be nationalized?
Regarding the possibility of the state becoming the majority owner of Petrohemija, Putniković suggested it could be part of a package deal with NIS.
“I doubt anyone is thinking of separating parts of NIS now, since the refinery is the most important aspect. We could reach an agreement with the Russians for them to exit ownership,” she said.
She also mentioned that investments in Petrohemija totaling 150 million euros have been planned to renovate various facilities.
Challenges at Petrohemija
A major challenge for Petrohemija is its aging workforce. “Technological processes are dangerous, and certain jobs require specialized training, which can take anywhere from six months to three years,” Putniković emphasized.
She noted that experts had been leaving due to low wages, but that conditions have improved since the COVID-19 pandemic.
“Petrochemical products have gained higher prices on the global market, and many Serbian companies producing car components now work with Petrohemija,” she concluded.
