On Sunday, November 9, it will be one month since the sanctions were introduced Oil Industry of Serbia (NIS).
Energy expert Miloš Zdravković tells "Vreme" that despite the sanctions, Serbia will be able to import processed products petroleum products at a higher price than if they were processed in the Pancevo Oil Refinery, which will be state-owned the budget cause enormous damage.
At the same time, energetically expert Željko Marković warns that, if the situation does not change, disruptions in the oil derivatives market can be expected at the end of January.
We will pay for the damage through loans
Zdravković reminds that there are countries that do not have their own refineries.
"The sanctions are a big blow to the budget, because NIS directly or indirectly employs 14.000 people, and in 2023 and 2024 that company is in budget paid two billion euros each, and relatively speaking it is an irreparable loss. A good part of those revenues will be paid by those who import the derivatives, but the derivatives will definitely not be processed in Serbia," says Zdravković.
He reminds that NIS manages the only oil refinery in Serbia, with a capacity of 4,8 million tons per year, and that the Jadranski Naftovod (JANAF) concluded a contract with NIS for the transport of 10 million tons of oil, plus or minus 10 percent, until December 31, 2026.
He assesses that it is a huge business from our perspective, but states that at the same time Rusija it exports 2,2 million barrels of oil a day to China, and two million barrels a day to India.
He also states that the prices of oil derivatives, although there was fear among citizens, did not suddenly jump, but that Serbia will have to pay for it through loans, because there is no money in the budget.
Reserves will not be replenished at the rate at which they are depleted
Marković tells "Vreme" that for now NIS is operating as before, given that, according to officials, the Pančevo Oil Refinery has oil to process until November 25
"Therefore, there are no disturbances in the market for now, regardless of the sanctions. After November 25, the market will be stable for some time, that is, there will be no shortages, because there are reserves. Disruptions can only be expected later, if the refinery stops. When the disturbances will appear depends on consumption, but also on how quickly reserves will be consumed. Reserves will be able to be replenished, but not at the pace at which they will be consumed, because for now there is no possibility of such replenishment, due to logistical and other reasons problems", warns Marković.
He states that we will have better projections only after two months have passed since the introduction of sanctions.
"The state projected that it would have reserves for five months, but real signals about the state of the market will most likely appear at the end of January," says Marković.
Between the hammer and the anvil
Zdravković explains that there are company and state prices for oil derivatives.
The company's price is affected by how much oil costs on the stock market, and Serbia buys Brent oil on the London Stock Exchange.
"In this part of Europe, the availability of tankers in the Mediterranean and the availability of oil terminals should be added to the company's oil price. Then, the price of transmission technology and the price of production technology are included, which depends on whether a refinery is outdated, and then there are distribution costs to gas stations," explains Zdravković.
State taxes should be added to all that excise taxes, which Zdravković says were the largest in Serbia in this part of the world.
"Probably, due to increased costs, distribution and imports, the company's price will also increase, so taxes and excise duties will have to be reduced, but on the other hand, the hole in the budget will also have to be reduced, but these are already problems that economists should deal with," says Zdravković.
Gas - a very strong trump card in Russian hands
Regardless of how much it is stated in the media that oil imports from Russia are decreasing on a global level, Zdravković says that this is not happening, and that, on the contrary, China is increasing imports, and there are indications that India will do the same, and that only the companies that import Russian oil have changed, those that are outside the influence of Western sanctions.
"These are not simple scenarios, big players are playing, and our country found itself between a rock and a hard place. On the other hand, we have gas, which is a very strong trump card in Russian hands. The fact that it is said that we can do this or that - we can do nothing. The annual consumption of gas in Serbia is between 2,8 and three billion cubic meters of gas, of which 1,73 to 1,75 billion cubic meters are consumed by industry, large cities around 650 million, and households 300 million cubic meters of gas. We could potentially import 1,8 billion cubic meters of gas from Bulgaria if the Bulgarians were ready, that is, if their pipeline connected to the interconnector was expanded, but it is not yet," says Zdravković.
At the same time, he adds, gas is not bought "like in a drugstore", but long-term contracts are concluded.
He points out that the American explanation that sanctions are being imposed on NIS because of the financing of the war in Ukraine is meaningless, because NIS makes up less than one percent of Gazprom's portfolio, and he also reminds that Gazprom is not even the largest Russian oil company.
There should be no shortage of gas
On the other hand, Marković says that there should not be a shortage of gas, even though Serbia has not signed a new contract with the Russians for the supply of gas, but that it is delivered according to the old contract that has been extended until the end of the year and which, for now, is coming unhindered from Russia.
When it is European Union in question and the introduction of a regulation that should reduce the import of gas from Russia, it does not apply to Serbia, which is not a member of the EU, and does not apply to the transit of Russian gas through Bulgaria.
"If there is a disruption, that is, if Russia stops supplying us with gas, Serbia can always buy gas from the other side and be supplied via the old route that was used to supply it before the construction of the Balkan Stream. The problem is whether we have leased capacities for the transit of that gas and whether we have signed contracts with European suppliers, i.e. with those from whom we would buy gas, if imports from Russia stop. The problem is that the price of that gas would be higher than the current one," says Marković.
However, he adds that "Srbijagas", if it is certain that Russia will stop supplying, will look for another supplier in time.
