Sanctions against Serbia’s Oil Industry (NIS) will come into effect on February 27, 2025, and a response to an official request sent to the U.S. Department of Finance seeking a 90-day delay has not been received yet. This was reported in the article “Oil Industry of Serbia under pressure” by Sanja Filipović, published in the Macroeconomic Analysis and Trends journal.
In 2008, Gazpromneft bought a 51 percent majority stake in NIS for 400 million euros, with an obligation to invest an additional 500 million euros in the company’s development. Filipović mentioned that while the sale price of the majority stake was controversial, it is important to consider that over 4 billion euros have been invested in NIS since the purchase, with around 30 percent of this directed toward environmental projects.
Filipović also noted that after privatization, capital investments in NIS have grown by 3.6 times annually. Thanks to these investments, the Pancevo refinery is now one of the most modern and environmentally advanced in the region.
Additionally, NIS has expanded its operations into electricity production and trade, as well as business ventures in neighboring countries such as Bosnia and Herzegovina, Bulgaria, and Romania.
Sanctions against the Russian Federation have led to changes in oil supply routes and exerted pressure for ownership transformations of oil companies with Russian interests. The question now is how to find a solution for the sanctions against NIS in the short term. It is also important to note that Rosneft Deutschland, one of the largest players in the German oil market with a 12 percent share of oil processing capacity in Germany, has had its funds placed under the administration of the German Government since September 2022.
So far, this decision has been extended four times and is valid until March 10, 2025. Due to the pressure of potential nationalization, Russia is negotiating with Kazakhstan to sell shares in German refineries in which Rosneft holds ownership stakes.
After NIS was privatized, all its business indicators improved significantly. However, after the record results in 2022, the sanctions imposed at that time negatively impacted business results.
According to 2024 data, compared to the previous year, NIS had a slight decrease in income by 1 percent, but its net profit dropped by 58 percent, and EBITDA, the key profitability indicator, fell by 35 percent.
Since privatization, the Serbian government has lost control over NIS as it now holds only a minority share of 29.87 percent. Today, NIS is the only producer of crude oil and natural gas in Serbia, the only oil refiner, and owns a network of 400 gas stations across Serbia and the region.
For this reason, NIS must be viewed in a broader context, with its importance and contribution to the Serbian economy recognized. According to a study by auditing and consulting company KPMG, which assessed NIS’s economic impact in Serbia from 2010 to 2020, the company contributed an average of 5.1 percent annually to the country’s GDP.
During the previous decade, NIS was one of the top domestic exporters, with average annual exports worth 262 million euros. However, in 2023, NIS lost its position as the top domestic exporter, as business revenues dropped by a fifth, primarily due to decreased revenue from domestic and foreign product sales.
In 2023, NIS’s business profit was halved, and its net profit stood at just 44.8 percent of the previous year’s level.
Today, NIS is one of the largest vertically integrated energy systems in Southeast Europe, employing around 13,500 people, including employees of HIP Petrohemija, in which NIS increased its ownership stake to 90 percent in 2021.
Moreover, NIS is one of the largest contributors to the national budget. In 2023, the calculated obligations based on public revenues amounted to around two billion euros, representing about 12 percent of Serbia’s total budget.
