The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has updated Executive Order 14024 concerning Russia’s energy sector, stating that Serbia’s Oil Industry (NIS) is at risk of secondary sanctions due to its transactions with Gazprom Neft, its majority owner.

In the document, OFAC explicitly identifies NIS, based in Novi Sad, as vulnerable to these sanctions. The update refers to Section 11 of Executive Order 14024, which allows sanctions against foreign financial institutions (FFIs) engaged in specific transactions related to Russia’s military-industrial complex or entities whose assets are blocked under this order.

Section 11 permits sanctions against FFIs that facilitate significant transactions for entities designated under the executive order for their operations in Russia’s defense, aerospace, or related sectors.

In this aspect, envisage sanctions to FFI that provide services or transactions involving Russia’s military-industrial complex, including the sale, supply, or transfer of items deemed supportive of Russia’s defense activities.

OFAC measures effectively prohibit NIS from conducting transactions with its majority owner, Gazprom Neft, which is already under U.S. sanctions. This includes dealings involving debt, equity, or derivative contracts tied to Gazprom Neft, Surgutneftegas, and other newly sanctioned entities as of January 10, 2025.

The sanctions put NIS at significant risk of penalties if it engages in transactions linked to its Russian owner or sectors associated with Russia’s military-industrial base. Since Gazprom Neft holds a controlling stake in NIS, the Serbian company now faces substantial exposure to secondary sanctions from Washington.

The updated sanctions framework tightens restrictions on financial institutions and companies interacting with Russian entities. For NIS, any collaboration with Gazprom Neft or entities under sanction could trigger direct consequences.

While the Serbian government has yet to announce its response, the heightened risk places additional pressure on Serbia’s foreign policy and its economic ties with Russia. As the situation develops, it remains uncertain how NIS will navigate these new constraints without jeopardizing its operations or broader relations between Serbia and the U.S.