August Fuel Plan: NIS Releases 23,000 Tons of Reserves
The Ministry of Mining and Energy released its August fuel plan: NIS releases 23,000 tons of reserves to other firms, while a 20,000 ton diesel shipment by barge is in doubt.
Serbia’s August fuel supply plan counts on importing around 39,000 tons of diesel, with roughly 20,000 tons of that volume expected to arrive by river. Low water levels on the Danube have put that portion of the imports in doubt, the Ministry of Mining and Energy said after a meeting between Minister Dubravka Djedovic Handanovic and representatives of the Association of Petroleum Companies of Serbia and the Petroleum Industry of Serbia (NIS).
The import plan matches July’s in volume, but the logistics have changed: barges are being replaced by rail cars and tankers. We reported on August 2 that diesel was scarce in both Constanta and the Mediterranean, and that the state was turning to its reserves. This is the first time the August volumes, deadlines and carriers have been laid out in figures.
What the 23,000 Tons From Operating Reserves Means
As one of the measures, the ministry announced that NIS will be allowed to make around 23,000 tons of its own operating reserves available to other petroleum companies now seeking supply from the domestic refinery.
Djedovic Handanovic explained after the meeting how the measure fits into August demand:
NIS has told us that in the second half of the month, once the crude oil deliveries already ordered can arrive, they will be able to raise processing from the current roughly 9,500 tons of crude oil a day to around 13,000 tons a day. As one of the measures, we will allow NIS to put around 23,000 tons of its operating reserves at the disposal of other petroleum companies that currently have higher demand from the domestic refinery, which will make it possible to meet the enormous demand of around 200,000 tons of petroleum products we expect in August
Operating reserves are not the same as state commodity reserves. They are quantities the companies themselves are required by regulation to keep in stock, and using them requires a permit. State reserves, the minister said, remain untouched for cases of extreme necessity.
Put the two months together and the pressure becomes clear. In July, around 19,000 tons of Euro diesel were released from petroleum companies’ operating reserves. Now 23,000 tons from NIS are being added on top, for a total of about 42,000 tons, more than the entire diesel import planned for the month.
Other measures at play are less visible at the pump:
- the ban on exporting crude oil and petroleum products, including Euro diesel, has been extended through the end of August
- transport is being shifted from barges to rail cars and tankers, in smaller volumes per trip
- kerosene reserves are sufficient for around a month and a half of consumption, while gasoline supply remains stable
Why Is the 20,000 Tons of Diesel Imports in Doubt?
Because more than half of August’s diesel imports were planned to arrive by barge, and the Danube is at a record low level. Cargo that gets stranded is not lost, it shifts to costlier transport, and that hits importers’ math in two places at once: fewer tons per trip and a higher price per ton, at a time when retail prices are capped.
Transport is being organized by rail cars and tankers, which means smaller quantities can be delivered, but also higher import costs for petroleum companies, all under capped prices. Still, whatever the problems and challenges we face, we will protect citizens from a sudden rise in prices, and our reserves are sufficient, should the need arise, to use them as well to ensure supply to the domestic market
Pricing pressure is also coming from the wider market: the minister pointed to Russia’s decision to ban exports of petroleum products and to Turkey’s purchase of a million tons of diesel on the Mediterranean.
Pancevo Refining Carries the Whole Month
When imports fall short, the refinery is what is left. NIS general director Kiril Tjurdenjev gave the production figures without rounding:
Our processing averages 11,000 tons a day, or 330,000 tons in August, which is the maximum we can reach with a license valid for only one month. We are taking steps to raise production to 13,000 tons a day in the coming period, so that we secure sufficient volumes of petroleum products and continue contributing to supply stability
The jump from 9,500 to 13,000 tons a day would be a 37 percent rise in daily processing, but only in the second half of the month and only once the ordered crude oil deliveries arrive.
The Deadline Hanging Over September: August 28
The license issued by the US Office of Foreign Assets Control (OFAC), which allows NIS to operate, is valid through August 28. The minister explicitly tied stable supply to that deadline: supply is steady and stable “for as long as the license is valid,” meaning until that date.
Three days before the end of the month, the basis on which the refinery operates expires, and it is precisely that refinery the plan names as the substitute for the volumes the Danube cannot carry. The next announcement that will decide September’s fate is not a hydrological forecast, but a decision on extending the license.
“The Danube’s water level is at a record low, and in these extraordinary circumstances the refinery’s operation is critical, because the poor hydrology will persist and all petroleum companies in Serbia are supplied primarily from the domestic refinery,” Djedovic Handanovic said.
