Transport of crude oil via the Adriatic Oil Pipeline for Serbia’s oil company Naftna Industrija Srbije (NIS), which supplies about 90 percent of the country’s market, will be ceased on May 15 due to the European Union’s sanctions against Russian companies. The Ministry of Mining and Energy is considering alternatives for supplying the market.
Croatia’s oil transport company Jadranski Naftovod (JANAF), which manages the Adriatic Oil Pipeline only said what is known since the European Union adopted the fourth package of sanctions against Russian companies on March 15 due to Russia’s military intervention in Ukraine. The EU’s ban comes into force on May 15 for contracts concluded before March 16, 2022.
JANAF said it has a contract with NIS to transport a total of 3.2 million tons of crude oil this year.
The EU announced that cooperation with Gazprom Neft, majority owner of NIS, would be banned from May 15
If there are no changes, the implementation of the agreement must be halted from May 15 on, in line with the EU’s decision, JANAF said.
The fourth package of sanctions prohibits European companies from cooperating with a number of Russian companies including Gazprom Neft and its subsidiaries in which it has more than 50 percent ownership. NIS, whose director is Kirill Tyurdenev, is one of them. And JANAF is, of course, a European company. However, the package doesn’t prohibit EU countries from buying Russian oil. It could be said that Serbia is in rather a specific situation having an oil company in Russian ownership. It is rare both in the EU and in the region.
There are several options for Serbia to continue importing crude oil
Of course, there are several options for Serbia, more precisely NIS, to continue importing crude oil and supplying the market with fuel. They will heavily depend on the EU’s clarification of the latest restrictive measures.
According to available data, more than 3 million tons of petroleum products are consumed annually in the Serbian market, of which last year NIS provided about 2.7 million tons. Most of the oil for the production of fuel comes through the Adriatic Oil Pipeline, which goes from the Croatian port of Omišalj to the border with Serbia, and then further to the Pančevo Oil Refinery. Last year, NIS processed 3.9 million tons of oil, of which it imported 2.8 million tons.
Ministry: all options are examined
The Ministry of Mining and Energy, led by Minister Zorana Mihajlović, announced that it is analyzing all solutions for securing supply in case crude oil cannot be transported via the Adriatic Oil Pipeline.
Raša Kojčić, Assistant Minister of Mining and Energy, said Serbia is waiting for the EU to officially clarify the measures from the fourth package of sanctions, but that it is also looking for other options, both legal and technical. Any port in the region could be an alternative, he said and pointed to Bar, Ploče, Zadar, Omišalj, Rijeka, Thessaloniki, Burgas, Constanța.
He added crude oil and petroleum products could be delivered to the said ports, and then by river, rail or road to Serbia.
The ministry is analyzing available legal, business, logistical and technical possibilities for the import of crude oil and petroleum products. It will also examine all possibilities to extend the supply via JANAF.