NIS Plans 330,000 Tons of Refining Before August 28 Deadline

The refinery in Pancevo processes an average of about 11,000 tons of crude oil a day, which works out to roughly 330,000 tons for August, NIS general director Kiril Tjurdenjev said at a meeting with the Ministry of Mining and Energy. That, he said, is the maximum achievable under a license that runs for one month.

The meeting between Minister of Mining and Energy Dubravka Djedovic Handanovic and NIS’s top executive took place on August 5, with production and refining plans for the month on the agenda. Diesel demand in August is estimated at around 200,000 tons, with diesel and gasoline sales expected to be the highest in five years.

“We are taking steps to raise production in the coming period,” Tjurdenjev said.

Two Figures for the Same Output

Two different numbers are circulating for the refinery’s current output. Tjurdenjev’s own figure is an average of 11,000 tons a day. The minister, speaking about the same refinery, cited about 9,500 tons a day. Neither statement describes a rise or fall relative to the other, both refer to the present state of operations.

The plan, however, is the same either way: raising output to about 13,000 tons a day in the second half of August, once previously contracted crude deliveries arrive. The gap between 11,000 and 13,000 tons a day adds up to roughly 60,000 tons of derivatives over a month, which is the margin that decides whether domestic demand is covered from Pancevo or from imports.

The lineup of quantities on the table for August:

• diesel imports of about 39,000 tons, similar to July
• of which about 20,000 tons were supposed to arrive by river
• about 23,000 tons of NIS’s operational reserves made available to other oil companies
• kerosene stocks sufficient for a month and a half of consumption

Why the Danube Is Dictating Imports

The Danube’s water level has been low for weeks, and it is cutting off the cheapest leg of imports first. Instead of arriving by river, fuel is brought in by rail wagon and tanker truck: smaller volumes per trip, a higher cost per ton. When imports drop, the refinery is the only domestic source left.

Two outside pressures are adding to prices. Russia has restricted exports of oil derivatives, and Turkey has bought a million tons of diesel on the Mediterranean market, leaving less supply there than there was at the start of summer.

We have already reported on one of the measures filling the import gap: NIS made about 23,000 tons of its operational reserves available for August. That followed the release of about 19,000 tons of Eurodiesel from oil companies’ operational reserves, which covered July’s demand. State commodity reserves, the ministry said, are being kept for more critical periods.

What Does the August 28 Deadline Mean?

The US OFAC has extended NIS’s license to operate, and to negotiate its ownership structure, until August 28, 2026. Without that permit the refinery would have no framework to operate under, which makes the deadline the outer limit of how long the figures in the refining plan hold.

“Supply will be stable and orderly in August, for as long as OFAC’s license is valid, that is until August 28,” Djedovic Handanovic said after the meeting.

On top of that, exports of crude oil and oil derivatives are banned through the end of August, to keep supply on the domestic market. The next date on the calendar is OFAC’s decision on the license’s further status, followed by the arrival of the ordered crude deliveries, which will determine whether refining actually reaches 13,000 tons a day.