Hungary to boost oil deliveries to Serbia as US sanctions cut supplies

BUDAPEST (Reuters) -Hungarian oil and gas company MOL will increase crude oil and fuel deliveries to Serbia after supplies to its Russia-owned NIS refinery were cut due to U.S. sanctions, Hungary's Foreign Minister Peter Szijjarto said on Wednesday.

The U.S. Treasury Department’s Office of Foreign Assets Control imposed sanctions on NIS in October, as part of wider sanctions against Russia's energy industry, after a series of waivers since January.

The measures have halted supplies of crude oil from Croatia's JANAF pipeline, which the Serbian government has said will mean its Russian-owned only oil refinery will have to shut this week unless the sanctions are postponed again.

Szijjarto said that MOL had doubled deliveries to Serbia in November and would deliver two and a half times more crude oil and fuel than usual in December.

"Hungary will use all available means to help ensure Serbia's crude oil supply remains secure," Szijjarto said after meeting Serbian energy minister Dubravka Djedovic Handanovic in Belgrade.

Hungary, whose Prime Minister Viktor Orban is an ally of U.S. President Donald Trump, imports most of its crude from Russia and some via the JANAF pipeline from Croatia.

On Tuesday, Serbian President Aleksandar Vucic said Belgrade would give the Russian owners of NIS - Gazprom Neft and Gazprom - 50 days to sell their stake in NIS or the government would take over operations and make an offer to buy them out.

Vucic and his energy minister said Serbia would have to secure an operational licence from OFAC by the end of Wednesday to keep the NIS refinery operational.

"We will see — I hope today or tonight — what kind of response will arrive," Djedovic Handanovic said at the briefing with Szijjarto.

"It is important, that operations are not disrupted and that the market is supplied. We are ready to make all the necessary decisions to ensure that happens," she said.

Parliament Speaker Ana Brnabic said the ruling coalition was preparing an amendment to the budget law that would allow Serbia to take control of NIS from its Russian owners.

Russia's Gazprom Neft holds 44.9% of NIS and Gazprom 11.3%. Serbia owns 29.9%, with the rest held by small shareholders.

Szijjarto also said that Hungary and Serbia were ready to accelerate construction of a planned oil pipeline connecting the countries. In April he had said the pipeline could begin to meet all of Serbia's crude oil needs by 2028.

(Reporting by Anita Komuves in Budapest and Aleksandar Vasovic in BelgradeEditing by Jan Harvey, David Goodman, Philippa Fletcher)