NIS Posts €84mn Profit as Oil Prices Boost First-Half Results

Serbia’s oil and gas company NIS recorded a significant financial recovery in the first half of 2026, returning to profitability despite continued uncertainty over its ownership structure and ongoing operations under temporary US sanctions relief.

The company reported RSD9.8bn in net profit, equivalent to approximately €84mn, for the six months ending 30 June 2026. Earnings before interest, taxes, depreciation and amortisation (EBITDA) reached RSD35.1bn, or nearly €300mn, supported by stronger crude prices, favourable inventory effects and tighter cost management. The result represents a turnaround of RSD13.4bn compared with the RSD3.6bn net loss recorded in the first half of 2025. EBITDA more than tripled from RSD10.2bn, while operating cash flow increased from RSD1.7bn to RSD16.6bn.

Earnings Recovery Driven by Market Conditions

The improvement was achieved without a corresponding increase in production, refining output or sales volumes. NIS produced 554,400 tonnes of oil equivalent during the first half of 2026, compared with 556,000 tonnes in the same period a year earlier. The Pančevo refinery processed approximately 1.6 million tonnes of crude oil and semi-finished products, down from 1.68 million tonnes, while petroleum-product sales declined from 1.52 million tonnes to around 1.4 million tonnes.

The company’s stronger financial result was therefore mainly linked to price movements and inventory effects rather than operational expansion. Average Brent crude oil prices reached $92.60 per barrel in the first six months of 2026, compared with $71.70 per barrel in the same period of 2025, representing an increase of almost 30%.

For NIS, which combines domestic oil and gas production, refining operations, wholesale activities and a large retail fuel network, higher crude prices create both benefits and challenges. Upstream revenues improve, but procurement costs and working-capital requirements also increase. During the first half, the company benefited from processing inventories purchased at lower prices and selling refined products into a stronger market environment.

Cost Controls Offset Previous-Year Losses

The financial recovery contrasts with the first half of 2025, when NIS faced lower petroleum-product prices, higher-cost inventories accumulated for supply security, sanctions-related procurement pressure and losses at HIP Petrohemija. The petrochemical subsidiary recorded a RSD4.7bn loss during that period, contributing significantly to the group’s negative result.

The 2026 figures show that inventory management and cost controls restored operating profitability, although production and sales trends remained weaker. Oil and gas output was broadly unchanged, refinery processing declined by around 5%, and total sales dropped by approximately 8%. NIS has warned that the positive inventory impact may weaken in the third quarter as higher-cost crude purchases gradually enter the refining system. Future results will depend on refining margins, crude procurement timing, regional fuel-market conditions, exchange rates and domestic fuel-price regulation.

Investment Maintained Despite Ownership Uncertainty

NIS invested RSD11.8bn, approximately €101mn, during the first half of 2026, compared with RSD12.4bn in the same period of 2025. The relatively stable investment level indicates that management continued funding essential projects while adjusting lower-priority spending. The company’s capital requirements remain significant. The Pančevo refinery, Serbia’s only crude-oil refinery, has annual processing capacity of approximately 4.8 million tonnes and supplies most of the domestic market.

Maintaining refinery reliability, expanding crude-supply flexibility and upgrading storage and logistics infrastructure require continued investment. NIS also requires ongoing capital expenditure to manage the natural decline of domestic oil and gas fields. Serbian production assets require drilling, well interventions, seismic activities and enhanced recovery measures to maintain output.

State Revenue Contribution Remains Significant

NIS contributed RSD101.4bn, or approximately €865mn, through taxes, excise duties, fees and other public obligations during the first six months of 2026. The figure was slightly below the RSD104.7bn recorded a year earlier but remained a major contribution to Serbia’s public finances.

The company’s role extends beyond corporate earnings because it is a key element of Serbia’s fuel supply system, industrial infrastructure and energy-security framework. Any disruption affecting crude imports or refinery operations could influence fuel availability, transport costs, agricultural activity and government excise revenues.

Sanctions and Ownership Structure Remain Key Risks

The main uncertainty surrounding NIS is linked to ownership rather than current operating performance. Russian companies continue to hold a majority stake in the company. Gazprom Neft owns 44.85%, while another 11.3% is held through the Gazprom-controlled company Intelligence. The Serbian state owns 29.87%, with the remaining shares held by employees, former employees and minority investors.

NIS has continued operating under a temporary licence issued by the US Treasury’s Office of Foreign Assets Control (OFAC), allowing activities including crude imports, payments and essential operations despite sanctions restrictions.

The licence in effect at the time of the half-year results was scheduled to expire on 31 July 2026, and the company requested a further extension. The temporary authorisations have also allowed Croatian pipeline operator Janaf to continue transporting crude to Serbia. NIS relies heavily on the Adriatic pipeline connection because most crude processed at Pančevo is imported through Croatia. A disruption to sanctions permissions could affect not only NIS but also banks, insurers, traders, logistics providers and pipeline operators involved in the supply chain.

MOL Discussions Shape Future Ownership Model

Negotiations over the future ownership structure have focused on MOL Group, which reached an agreement in principle to acquire the majority stake held by Gazprom Neft and Gazprom. Serbia has separately negotiated a shareholders’ framework with MOL and plans to increase its own ownership stake by 5 percentage points, raising the state holding to nearly 35%.

Belgrade’s priorities include continued operation of the Pančevo refinery, preservation of domestic production capacity, secure fuel supplies and maintaining influence over strategic decisions. For MOL, acquiring NIS would provide access to a refinery and retail network extending into south-eastern Europe. NIS operates more than 400 active retail locations across the region, including more than 320 stations in Serbia. The company’s infrastructure would expand MOL’s regional presence alongside its existing operations in Hungary, Slovakia and Croatia.

The transaction could also create opportunities for integrated crude procurement, refinery optimisation and cross-border fuel distribution. Completion depends on regulatory approvals, financing arrangements and the removal of sanctioned Russian ownership.

Cash Flow Provides Short-Term Financial Buffer

The first-half results improved NIS’s financial position. Operating cash flow of RSD16.6bn covered the RSD11.8bn investment programme by approximately 1.4 times, generating positive internal funding before financing costs and other obligations. EBITDA was almost three times higher than capital expenditure, providing additional protection against short-term market volatility. The earnings recovery remains exposed to external factors. A significant part of the improvement came from higher Brent prices and the use of lower-cost inventories. With production, refining and sales volumes below previous-year levels, future performance will depend on ownership resolution, continued crude access, stable payment channels and the restoration of a predictable long-term investment framework.