United Arab Emirates state energy company Adnoc has emerged as the frontrunner to buy Russia’s controlling stake in Serbia’s sole oil refinery, as Belgrade grows increasingly frustrated with Moscow’s foot-dragging under US sanctions.

Adnoc, or Abu Dhabi National Oil Company, is the main contender to acquire the holding in Serbian Oil Industry (NIS), four people familiar with the proposed deal told the Financial Times.

While Adnoc is favourite to buy NIS, operator of the Pančevo refinery and the Balkan country’s main crude importer, the Serbian company is continuing to talk to other potential bidders, including Hungarian national oil group MOL, two of the people said.

The fate of NIS has hung in the balance since January when it was caught up in US sanctions targeting Russia. The US Treasury called on the Russian owners to sell their stake in NIS as part of its efforts to target Moscow’s oil revenues.

NIS’s problems deepened when Washington did not extend the waivers that had allowed it to continue operating, forcing the company to halt oil production on Friday.

NIS, which supplies the vast majority of Serbia’s oil products, is 56% owned by two Gazprom subsidiaries, mainly Gazprom Neft, with the Belgrade government holding about 30% and the rest with small shareholders.

The sanctions have led to increased tensions between the owners of NIS, two people close to the company said, with Serbian officials becoming increasingly frustrated with the Russian co-owners for repeatedly delaying a sale that could resolve the issue.

“They seemed reluctant to [negotiate] until the very end, even though there was no shortage of potential buyers and plenty of time to figure the deal out,” one of them said.

This attitude had only changed in recent weeks, two people familiar with the discussions said. Yet sources close to the Serbian leadership questioned whether the Russian side was really willing to sell.

The involvement of Adnoc is down to the close relationship between the UAE and Serbia, rather than for strategic or business reasons, said another person familiar with the process.

Source: FT