This morning, Serbian President Aleksandar Vučić announced on Instagram that “Serbia has been granted an additional 30 days for the Oil Industry of Serbia (NIS).”

Vučić shared a document from the US Department of the Treasury confirming this decision.

Sanctions against NIS were scheduled to take effect at six o’clock this morning.

Serbia has requested a delay in sanctions for a minimum of 90 days.

NIS receives authorization from the US Treasury to continue operations

The full sanctions imposed on NIS by the US Department of the Treasury will remain postponed until at least March 28, 2025, as per a document (license) received by the company from that department.

This license, as NIS disclosed today, permits the company to continue its business activities, contractual obligations, and other agreements involving NIS or its subsidiaries, as well as to execute all transactions aimed at fulfilling these contracts.

Furthermore, the alienation or transfer, or facilitation of the alienation or transfer of debt or equity issued or guaranteed by NIS or its subsidiaries (“Covered Debt or Equity”) to a non-US entity is authorized.

The license allows NIS to execute trades related to Covered Debt or Equity for orders placed before 4:10 PM Eastern Standard Time in January 2025, and to fulfill financial derivative contracts that were established before that date and include NIS or its subsidiaries as a counterparty or relate to Covered Debt or Equity.

It also facilitates official diplomatic or consular business abroad involving NIS or its subsidiaries.

“NIS will utilize the grace period from the sanctions to collaborate with shareholders to explore solutions ensuring long-term operational viability and Serbia’s energy security,” the statement indicated.

The company’s priorities, as previously stated, involve ensuring the consistent supply of petroleum products to the domestic market, maintaining operational continuity, and caring for employees.

“The supply chain for NIS gas stations remains stable, and the Pančevo Oil Refinery operates normally, providing all necessary oil derivatives to the market,” the company stated.

NIS mentioned that it will strive to quickly resolve any minor challenges related to payment transactions that have surfaced at NIS gas stations due to sanctions imposed by certain agencies.

Radosavljević: Postponement is a sign of hope, not a withdrawal of sanctions on NIS

Goran Radosavljević, a professor at the FEFA Faculty, stated today that the postponement of sanctions by the Office of Foreign Assets Control (OFAC) of the US Treasury against NIS does not equate to lifting the sanctions; however, he referred to it as a “positive signal.”

“Sanctions are not rescinded in this manner; there is a process for requesting temporary deferrals or permits under specific conditions, despite the sanctions. I believe NIS’s legal team successfully communicated the significance of the company for Serbia’s energy security, recognizing that this is not a short-term solution which warranted the postponement under certain stipulations,” Radosavljević told the Beta agency.

He emphasized that while it is beneficial that sanctions are postponed for 30 days, the risk of sanctions still looms.

Radosavljević noted that mid-January reports on the OFAC website indicated that various exceptions were granted to entities facing direct or indirect sanctions under specific conditions.

“I suspect OFAC will monitor NIS closely over the next 30 days to see if, for instance, it paid dividends to Gazpromneft; any such payments could lead to the suspension of the sanctions postponement. This extension likely involves fulfilling certain preconditions not yet detailed in the available documentation,” Radosavljević added.

He explained that, for example, the Croatian oil pipeline, Janaf, does not possess an exemption permit, meaning that any business operations with a sanctioned entity like NIS could place it at risk of being sanctioned itself.

The postponement is indeed seen as a positive signal and could potentially lead to further extensions if deemed necessary.

NIS could assert its independence from US sanctions since it operates in the region; however, it still acquires parts and oil from the global market, and banks involved with NIS are also international entities. Thus, any continuation of business under sanctions could indirectly impose sanctions on all partners involved.

“If they continued dealing with NIS while it’s sanctioned, banks and other suppliers would also risk being affected by these measures. They, along with Janaf and other international businesses, fear the repercussions and may cease partnering if the risks outweigh the potential benefits,” Radosavljević remarked.

Energy consultant Željko Marković stated that OFAC’s postponement of sanctions lacks clarity regarding the underlying reasons in the published document.

“It is clear that approved transactions are permissible until March 28, aligning with the sanction postponement period. This suggests that banks will be able to process NIS-related transactions until then, a detail not fully evident in the document,” noted Marković.

OFAK acknowledged NIS’s request for postponement, understanding the company’s vital role in Serbia’s economy, citizens’ welfare, and regional energy stability, as emphasized by the Serbian Government.

Sanctions have been deferred until March 28. NIS, with support from both the Serbian and Hungarian governments, previously sought a 90-day extension on the sanctions’ enforcement.

On January 10, the US Treasury Department enacted sanctions against the Russian firms Surgutneft and Gazpromneft, among others, to “reduce Moscow’s revenues derived from energy sales that fund the war in Ukraine,” according to its explanatory statement.

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