The looming US sanctions against Serbia’s Oil Industry (NIS), which is majority-owned by Russian companies Gazpromneft and Gazprom, could have far-reaching consequences not only for Serbia but also for neighboring countries like Croatia and Bosnia and Herzegovina (BiH). Experts suggest that Serbia could mitigate these risks by restructuring ownership of NIS, potentially taking control of a majority stake currently held by the Russians.
The sanctions are focused on the Adriatic Pipeline (JANAF), which is critical for transporting over 90% of Serbia’s oil. The key question is whether JANAF will continue honoring its oil supply contract with NIS, which is set to last until 2026, or if business operations will be jeopardized under sanctions.
Potential impact on Bosnia and Herzegovina
While the sanctions would primarily affect Serbia, they could also trigger higher oil prices across the region, particularly in Bosnia and Herzegovina, which imports oil derivatives from Serbia. However, experts believe that BiH’s oil market will not be heavily impacted, as the country imports only a small percentage of its oil from NIS.
“Serbia’s response to the sanctions, including potential changes to the ownership structure of NIS, will determine the extent of the impact,” says Almir Bečarević, an energy expert from Sarajevo. Although Bosnia imports about 20% of its oil derivatives from Serbia, experts suggest that any price increase would likely be moderate due to alternative supply channels like Italy and the port of Ploče in Croatia.
The role of JANAF and potential solutions
Serbia is highly dependent on JANAF for oil delivery, with over 90% of the country’s supply coming through this pipeline. In the event of sanctions, Serbia would face significant challenges in securing alternative oil transport, especially by sea.
Experts propose restructuring the ownership of NIS, either by Serbia buying out the Russian stake or negotiating a deal with the US to avoid sanctions. Zoran Pavlović, an economist, believes that such solutions could help prevent severe disruptions in the oil market. However, experts also caution that the Russian influence on NIS is not only economic but also political, making a full buyout unlikely.
US and Russian perspectives
US Ambassador to Serbia, Christopher Hill, has expressed that while sanctions on Russian companies could pose risks, a change in ownership structure at NIS could stabilize the situation, benefiting both Serbia and the broader region.
On the other hand, Russian Ambassador to Bosnia and Herzegovina, Igor Kalabuhov, criticized US sanctions as part of a broader effort to undermine Russian influence in the region. Kalabuhov warned that sanctions against NIS could strain relations between Russia and Bosnia, especially given Russia’s role in energy projects like the South Interconnection gas pipeline.
Looking ahead: The path forward
As Serbia navigates the potential sanctions, experts agree that finding a solution to the ownership structure of NIS is key to ensuring regional stability. The Serbian government holds a 29.87% stake in NIS, while Gazpromneft and Gazprom control 56.15%. Since the European Union and the US blacklisted Gazpromneft in 2014, the political and economic consequences of sanctions are likely to remain a sensitive issue for the region.
The outcome of these sanctions will largely depend on whether JANAF complies with US restrictions or maintains its oil deliveries to Serbia, which experts consider unlikely under the current geopolitical climate. The fate of the oil supply chain in the region hinges on how Serbia chooses to address these challenges, with potential consequences for Bosnia and Croatia.
