Croatia offers to buy Serbian oil refinery to bypass US sanctions

Croatia has expressed readiness to purchase Serbia’s NIS oil refinery if such a move could help lift U.S. sanctions, Economy Minister Ante Šušnjar told reporters, as quoted by N1.

NIS – in which Gazprom Neft owns a 44.9% stake, Gazprom 11.3% and the Serbian government 29.9% – operates Serbia’s sole refinery, in the town of Pančevo, just outside of Belgrade.

Gazprom Neft transferred a stake of around 5.15% in NIS to Gazprom on 26 February in an attempt to ward off sanctions.

The refinery has an annual capacity of 4.8 million tons and covers most of the Balkan country’s needs, and sanctions could jeopardise its supply of crude via Croatia’s JANAF pipeline.

The U.S. Treasury’s Office of Foreign Assets Control initially placed sanctions on Russia’s oil sector on 10 January, and gave Gazprom Neft 45 days to exit ownership of NIS. The sanctions’ enforcement has been postponed every month. So far, implementation has been delayed six times, most recently until 1 October, and subsequently extended by another eight days to 8 October.

“Our hand is extended. If this is the solution, we are ready for this option,” Šušnjar said, referring to the introduction of U.S. sanctions against NIS.

He explained that the move would guarantee continuity and safeguard the business interests of the JANAF, which has been closely linked to NIS for 40 years, “without any claims to dominate the Serbian retail market”.

“This would make things easier for both us and Serbia,” added the minister, a member of the right-wing Domovina movement, a minority partner in Prime Minister Andrej Plenković’s ruling HDZ government.

Šušnjar noted that the Pančevo refinery supplies 20% of the derivatives market in Bosnia and Herzegovina.

“This is an additional challenge for Bosnia and Herzegovina. By the end of the month, we expect the modernisation of the Rijeka refinery to be completed, which will increase capacity and allow us to support Bosnia and Herzegovina, and partly Serbia as well,” he said.

He dismissed suggestions that developments around NIS and the sanctions would threaten Croatia’s position in talks with Hungary’s MOL over oil supply to Hungary and Slovakia.

The minister underlined that Croatia is ready to supply sufficient quantities of oil to Hungary, Slovakia and Serbia once circumstances and geopolitical conditions permit.

Belgrade counters with ironic offer

Serbian President Aleksandar Vučić welcomed Zagreb’s interest in buying the Petroleum Industry of Serbia (NIS), saying Serbia in turn was interested in acquiring the Croatian electricity transmission company.

“Thank you for showing interest in buying NIS. This shows how much you care about Serbia. We will take this into account when our Russian partners in NIS inform us that they want to sell their stake in the company. Every offer is welcome,” Vučić said in an emergency address.

Vučić’s words are clearly ironic, as the Serbian president accuses Zagreb of fomenting a “colour revolution” to topple him from power. Following the collapse of Yugoslavia in the 1990s, Serbia and Croatia fought a bloody war, resulting in an estimated 20,000 to 50,000 casualties.

Vučić also said Serbia would like to purchase the JANAF pipeline from Croatia, claiming it had the best offer for the Croatian power transmission operator and that “nobody will offer more money for this company.”

“We are ready to offer 20% to 50% more money than any other participant in the tender for the Croatian transmission company,” he stressed, while adding that Croatian investors are welcome in Serbia despite Serbian companies failing in their bids to acquire Croatian firms such as confectionery group Kraš.

Commenting on criticism that he had not done enough to prevent the impact of U.S. sanctions on NIS, which came into effect today, Vučić said the measures had been postponed eight times at his request.

“They would have extended them further if I had signed that we would plunder and nationalise NIS,” Vučić said, adding that nationalisation of the company, which is majority-owned by Russia, was the last resort.

Sanctions felt across the board

The Serbian president stressed that US sanctions on NIS were not directed at anyone in the government but would be felt by everyone “politically, economically, socially and in every other sense.”

“Now we must be united and find the best possible solutions,” Vučić said, adding that he had spoken to the Russian ambassador earlier in the day and would continue talks with U.S. officials.

Vučić also warned that the recently introduced EU steel tariffs would hit Serbia’s Smederevo steel mill, owned by China’s Hbis Group.

“Today, another bad piece of news arrived – EU steel tariffs, which affect the UK, Turkey and Serbia the most. This will hit particularly hard the steel plant that employs 5,000 people,” Vučić said.

The European Commission adopted new steel tariffs on 7 October, slashing tariff-free import quotas by nearly 50% to 18.3 million tonnes annually and doubling duties on excess volumes to 50%, primarily to shield the EU steel industry from global overcapacity and subsidized imports from China.

Sources: BETA, N1, edited by k.n.

Caption: NIS headquarters building/NIS website