The Petroleum Industry of Serbia (NIS) posted record business results in the first three months, primarily due to the continued upward trend in crude oil price, which reached levels last seen during the global financial crisis. A stellar financial result would have been even better if the state had not approached regulating fuel prices after the start of the Russian-Ukrainian war which further escalated retail prices of oil derivatives.

In Q1, NIS doubled its revenues to RSD 98.0b, predominantly due to a 67% jump in the crude oil price and an increase of 23% in sales volume. EBITDA bounced 2.7x to RSD 25.4bn with a margin of 25.9%, a record level in the 1Q, due to the upward trend in crude oil price.  A record level of EBITDA came equally distributed among downstream (research and production) and upstream (processing and marketing) segments. Net profit was RSD 15.6bn (10.3x growth), partly due to a slowdown in the increase of depreciation expenses.

¤ Operating results – Domestic oil and gas production, supported by elevated crude oil price, were retained at last year’s level of 292.1th, following a downward trend for a while. Refining reached 904.9th tonnes (+20%), while sales volume increased 23% to 958.6th tonnes, almost equally distributed among retail and wholesale.

¤ Sanctions  – Given the majority of the ownership was a Russian state-owned company, NIS faced potential EU sanctions over the supply of crude oil through the Adriatic pipeline. The threat, which could have come into force on May 15th, led to a change in the company s ownership – Gazprom Neft lowered its stake to 50%. The new package of sanctions, however, will prevent Russian crude oil imports from December 1st, and the decision will affect the company certainly since Russian crude oil on the market is cheaper than alternatives. Last year, Rafinerija Pančevo processed only 16% of Russian crude oil, but because of a more favorable price mix, its percentage of total imports this year increased significantly.