NIS has shut down its only plant in Serbia due to US sanctions.

Serbia's Naftna Industrija Srbije (NIS) has suspended operations at its only oil refinery in the country due to a shortage of crude oil amid US sanctions, according to the company's website.

NIS is the main production asset of Serbia's oil refining industry. The company's controlling stake is owned by Russian entities Gazprom Neft (44.85%) and Gazprom (11.3%). Serbia itself owns 29.87%.

"The Pancevo refinery will begin shutting down production capacity today due to a shortage of crude oil for refining resulting from sanctions imposed by the US Treasury Department," the statement said.

The company explained that the Pancevo refinery's shutdown is being organized so that the refinery units are ready to restart immediately upon receipt of information about the availability of crude oil. Employees will continue to perform the same tasks as during scheduled shutdowns, they added. Despite the current situation, NIS continues to supply petroleum products to the domestic market without interruption using previously accumulated reserves, the statement added.

Meanwhile, the President of SerbiaAleksandar Vučić announced that the government will allow payments and transactions for NIS until the end of the week, despite the risk of secondary sanctions. This temporary measure is aimed at helping the company pay salaries to employees and complete other transactions, writesREUTERS .

According to the agency, the closure of the refinery, which has an annual capacity of 4.8 million tons, will impact the country's economy, as the facility employs approximately 14,000 people and accounts for approximately 5% of Serbia's GDP and about a tenth of its budget revenue. Furthermore, Serbia has small reserves that won't last long, the article notes. Currently, the country imports most of its fuel from neighboring Hungary.

In late November, Hungarian authorities announced that national oil and gas company MOL was in talks to acquire a stake in Serbia's NIS. They believe it is in the company's interests to escape Russian control. Gulyas described the potential purchase as a "market transaction." Discussions are in the early stages, and no final decision has been made, he added.

As the Serbian portal NIN.rs clarifies, the subject of negotiations between Belgrade and Budapest is the share owned by Gazprom.

The US imposed sanctions on NIS in early January of this year, when Joe Biden was president . Washington demanded that Russian participation in the company be completely eliminated. Since then, the restrictions have been postponed several times, but the sanctions took effect in early October.

In November, Serbian Minister of Mining and Energy Dubravka Djedović-Handanović announced that the Russian owners had agreed to sell their 56.15% stake in NIS. A few days later, The Wall Street Journal reported that the UAE-based Abu Dhabi National Oil Company (ADNOC) was negotiating the purchase of the Russian stake.

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