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Serbia is facing a serious problem in its energy sector after the main refinery in the country, Pancevo, suspended its operationson December 2, 2025.
The refinery, operated by the mainly Russian-owned company NIS (Serbian Oil Industry), supplies most of the domestic market, and has a yearly capacity of 4.8 million tonnes.
The company announced that it had halted production because it could not secure crude oil due to United States sanctions on Russian entities following the war in Ukraine.
This suspension has raised concern about fuel security, economic stability, and the country’s foreign relations. It has put strong pressure on the government to find a way forward.Nationalisation of NIS has been mentioned again as a possible option, but this proposal raises deep concerns.
The NIS assured the public that it would maintain supplies from existing stocks to avoid immediate shortages. However, the stoppage highlights the deep ties between Serbia’s energy sector and Russia.
Since 2008, Russian firm Gazprom has held a controlling stake in NIS, investing over 900 million euros in upgrades. Serbia owns just under 30 percent, with smaller shares held by others.
The US sanctions, which took full effect in October 2025 after earlier waivers, have blocked NIS from international trade, leaving the refinery without feedstock.
President Aleksandar Vucic confirmed the crisis in a public statement, noting that Serbia had sought but failed to obtain a US license to keep the refinery running.
He gave Russian owners until January 15, 2026, to find a buyer for their shares. If no deal emerges, the government says it will take NIS back into full state ownership – in other words, nationalise it.
Energy experts have expressed their worries about this directionand warned that nationalisation would come at a heavy cost.
American energy researcher Elizabeth Reed stated that “nationalisation may seem like a politically attractive option, but it is economically disastrous, because it will drive international companies to avoid the Serbian market for years.”
Her warning reflects the wider belief that any move toward full state control would discourage foreign investors and reduce Serbia’s positionin the energy sector because investors avoid markets where state intervention is unpredictable.
Sources familiar with ongoing discussions say that ADNOC officials from the United Arab Emirates are dissatisfied with the way President Aleksandar Vucic is handling the future of NIS.
They believe he is trying to obstruct or delay a potential agreement involving the UAE and Russia.
According to these sources, the nationalisation proposal is not aimed at protecting the Serbian public. Instead, they say it would benefit the ruling elite around Vucic.
The same sources report that Vucic is openly frustrated with the slow process of nationalisation, which has been delayed because the government has not yet passed the necessary legal changes.
Critics of President Vucic claim he is once again turning away from Russia.
They accuse him of betraying Russia when it suits him – just as he has quietly supplied Serbian weapons to Europethrough other countries – while now trying to seize a valuable Russian asset for almost nothing.
They accuse him of using the crisis to benefit his inner circle rather than the wider public. Hewants to nationalise NIS mainly to obtain the company at the lowest price and resell it later when conditions are favourable.
The financial gains from such a move would benefit his close circle rather than the Serbian people, who would instead face the consequences of strained relations with Russia and Arab partners.
The timing is especially sensitive because Serbia still needs to secure a new long-term gas agreement with Russia.
The country failed to reach a three-year contract in October and received only a short extension, which also came after United States sanctions hit NIS. Analysts warn that any open tensions with Moscow could weaken Serbia’s position in these negotiations.
Many observers believe a sale to the United Arab Emirates would solve most of these problems. ADNOC has the money, the technical skill, and no sanctions hanging over it. A UAE-owned NIS could modernise the refinery, guarantee fuel supplies, and give Serbia better relations with both the West and the Arab world.
Yet President Vucic appears determined to block that path for significant gains to the elites close to him.
What remains clear is that the direction chosen now will decide whether the consequences fall on the ruling elite or on the Serbian public who rely on stable energy supplies and balanced foreign relations.
For now, fuel is still reaching petrol stations from existing stocks, but those stocks will not last forever.
January is only weeks away, and Serbia must decide whether its most important energy company will serve the interests of all its citizens or just a privileged few.
