EU threatens to block Russian oil supplies to Serbia

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Croatian pipeline operator says sanctions don’t allow it to provide oil shipments to Serbian oil company owned by Russia’s Gazprom

Croatian state-owned oil pipeline operator JANAF said it will halt oil supplies to Serbian oil and gas company NIS starting mid-May, due to the latest sanctions introduced by the EU against Russia.

Russia’s Gazprom owns a 56.15%-share in NIS, which is one of the largest oil and gas companies in southeast Europe. The corporation is focused on exploration, production and processing of oil and gas, as well as the production and retail of petroleum products. The Serbian government owns a 29.87% stake in the company.

In January, JANAF signed a crude-oil transportation deal with NIS for 2022. The Serbian company reserved JANAF capacities for transportation of around 3.2 million tons of crude oil for the full year. However, JANAF will be unable to continue transport to Serbia after May 15 under this contract unless EU sanctions on Russian companies are lifted, the Croatian operator said in a filing to the Zagreb bourse.

It is not possible at the moment to estimate the potential duration and the future intensity of sanctions against Russia, and so it’s hard to evaluate all the effects of these measures on JANAF’s performance and whether they are going to jeopardize its financial position in 2022, the company added.

One of the sanctioned Russian companies is Gazprom Neft, together with the subsidiaries in which it has more than 50% ownership. The ban on cooperation with Gazprom Neft impacts Serbia because its oil company Naftna Industrija Srbije (NIS) is majority-owned by the Russian company.

The ban implies NIS cannot continue to buy Russian oil from European companies like the big traders such as Glencore and Vitol. However, the new sanctions do not prevent EU members from importing Russian crude.

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