No cause for panic: Serbia has enough oil reserves to last several month

Banjac, a professor at the University of Belgrade's Faculty of Mechanical Engineering, said the country could rely on existing reserves for two to three months without regular oil deliveries.

He warned, however, that the pipeline malfunction was more serious than initially believed.

Banjac expects JANAF to repair the fault soon, adding that failure to deliver contracted oil supplies could result in financial penalties, depending on the terms of the agreements.

He said the Pančevo Oil Refinery could continue operating using existing reserves despite the interruption.

During a previous supply disruption caused by sanctions, the Serbian oil company NIS had sufficient reserves to maintain normal petroleum product output for approximately one month.

"We will, of course, rely on the reserves already mentioned. That period could probably be extended by several more weeks," Banjac told Serbian public broadcaster RTS.

Serbia has oil reserves for around 60 days

According to available data, Serbia currently holds enough oil reserves to cover approximately 60 days of consumption.

Banjac explained that JANAF supplies around 80% of the crude oil used by NIS, while the remaining 20% comes from domestic production.

NIS, in turn, supplies approximately 70% of Serbia's petroleum product market, with the remaining 30% covered by imports.

"With these domestic reserves, we could certainly manage for two or three months, but that is not a solution. We need to resolve the NIS issue, the gas supply issue and even the problems facing electricity generation," Banjac warned.

Asked what would happen if the Pančevo refinery stopped operating, he said it would cause serious difficulties, although he did not believe such a scenario was likely.

"We could function that way for a while, of course, but it would not be a sustainable solution," he added.

NIS ownership negotiations unlikely to conclude by December 11

Commenting on negotiations between Hungarian energy company MOL and the Russian owners of NIS, Banjac said it was unlikely that a sale would be completed by December 11, when the current operating licences for NIS and JANAF expire.

"First of all, OFAC has not yet authorised the sale. These are still preparatory steps, intended to determine how the process might move forward. I do not believe it will happen that quickly," Banjac said.

However, he expects another licence extension, given that negotiations over the company's ownership structure are ongoing.

"We know that a new government now needs to be formed. Both the American and Russian sides should give that government a grace period to settle in and determine its approach.

"It would be logical not to put pressure on the new government to resolve this immediately," he said.

According to Banjac, the Russian owners have limited economic incentives to sell NIS because the proceeds would be deposited into an account from which they could not immediately access the funds.

He suggested that a change in ownership could secure stable oil supplies and that the future of the Pančevo refinery would not necessarily be threatened if MOL acquired NIS.

Falling global oil prices unlikely to bring immediate relief

Commenting on the decline in Brent crude prices from $115 to approximately $95.50 per barrel, Banjac attributed the drop to negotiations and easing tensions in the Middle East.

However, he does not expect lower crude oil prices to translate into cheaper fuel in Serbia in the near future.

"We have the NIS problem, and as long as the government determines fuel prices, they are no longer market-based. For the past two years, prices have effectively been set by the government," he explained.

Banjac said the state also regulates revenue from petroleum products by adjusting excise duties, a practice he expects to continue until the NIS situation is resolved.

"The government reduced the excise duty, but the total tax burden is still close to 100 dinars out of a fuel price of around 210 to 220 dinars.

"By raising or lowering excise duties, the government ensures a substantial flow of revenue into the state budget. That practice will probably continue," Banjac said.

Low Danube water levels affect electricity generation

Banjac identified electricity generation as another major challenge, particularly because low water levels on the Danube have reduced hydropower output.

"In October, we met a quarter of our electricity needs through purchases. At present, the Danube hydropower system is producing 40% of planned output, but the bigger problem is that this represents only 15% of its maximum capacity," he said.

He warned that reduced hydropower production would require additional electricity imports, creating significant costs.

Nevertheless, Banjac said there was currently sufficient electricity available on the European market and that Serbia had strong cross-border interconnections.

For these reasons, he does not expect major difficulties in securing electricity imports.

Gas storage facilities full, but new supply agreement needed

Regarding natural gas supplies, Banjac said official information indicated that Serbia's domestic gas storage facilities were full.

He noted that unusually warm weather was reducing gas consumption by district heating companies, easing pressure on the supply system.

However, the current agreement for Russian gas supplies expires at the end of the year, meaning Serbia's incoming government will need to negotiate an extension.

"The Russian side is interested in selling gas. I believe they will be willing to continue supplying it. The question is at what price," Banjac said.

He concluded that Serbia's overall energy situation remains complex and requires a swift response from the relevant institutions.