Pavlovic: There is no buyer for NIS, the refinery is shutting down, but derivatives will be imported

There is currently enough of all petroleum derivatives in Serbia, the authorities claim, while the US response to the request for the extension of NIS’s license is awaited, on which the continuation of the operations of the refinery in Pancevo depends. Financial analyst Vladan Pavlovic believes that there is still no potential buyer for NIS from the Emirates and that he believes that the refinery will soon stop operating. On the other hand, he believes that there will be petroleum derivatives in the coming months, thanks to increased imports.

Speaking of potential negotiations between Russia and potential buyers of Naftna industrija Srbije from the United Arab Emirates, financial analyst Pavlovic believes that there are no negotiations at all.

– Let’s start with how these news appeared one after the other. ADNOC and Abu Dhabi allegedly got involved first. Anyone who follows global financial flows knows that Abu Dhabi is the new global center of Russian capital through which all international transactions are carried out. Russia probably tried to sell NIS to itself through a Russian entity established there. That will not go under the radar of OFAC (Office of Foreign Assets Control). That is why Serbia was bypassed in the transaction and is not offered the right of first refusal. The Russians have no intention of selling NIS at all. I do not expect that a permission from OFAC will be received – says Pavlovic.

He claims that official Moscow has no interest in rushing to sell NIS, or in selling the company at all.

– Since last night, there has been a new peace plan of the United States for Ukraine, where Washington, Kiev and the European Union have in fact acknowledged many things that are in favor of Russia. Therefore, I am convinced that there is no question of a sale and that it will soon be announced that the license has not been obtained. That is how I interpret the extraordinary government meetings - they are probably talking with associations of oil companies to see how to import even more derivatives, and that this issue of NIS will be resolved when the sanctions against Russia are lifted. The biggest pity is that the refinery in Pancevo will not be operating during that time, including Petrohemija – points out the guest of the Morning Program of the Radio and Television of Serbia (RTS).

Sale, right of first refusal and intentions

Pavlovic points out that the problem is that no bank wants to cooperate with a company that is under American sanctions due to fears of secondary sanctions, which has already been presented to the National Bank of Serbia in the form of a warning.

– No serious fund or company will buy such a company until it receives a guarantee that the sanctions will not apply after the sale. We do not yet have such guarantees from America. Why would anyone invest in such a risky investment? On the other hand, if Washington really demands that the money from the possible sale of NIS really remain frozen until the end of the sanctions, then Russia will not agree to the sale – explains Pavlovic.

He emphasizes that only Belgrade is in a hurry in this situation, but underlines that he does not see the economic logic according to which Russia would sell NIS.

– If they want to get the highest price, they would agree to sell NIS to Serbia. After all, there is a right of first refusal that apparently no one respects. Someone misunderstood the Kremlin’s intentions - they have no interest in selling the company. If there was any intention, there were many chances to implement such a thing by now – he states.

Derivatives, imports and reserves

Pavlovic says that Serbia already imports about 30% of oil derivatives and that it is possible that the quantities from the same suppliers will increase in the coming period.

– Oil derivatives associations need to know the exact quantities. If the refinery stops operating, and I think that will happen, we will be about 140,000 tons short - which is about 3,500 tankers or 160 tankers more on a daily basis – explains the financial analyst.

He claims that Serbia also has certain reserves with which it could last another two or three months.

– In that sense, we will have enough derivatives, it’s just that we will import. There are also countries in the region that do not have refineries, but they have oil derivatives and these derivatives are cheaper than here – concludes Pavlovic.

NIS a.d. Novi Sad

Naftna industrija Srbije ad Novi Sad

ADNOC

OFAC

Pančevo Oil Refinery

Vladan Pavlović

sanctions on NIS

sale of NIS